Staff Reporter

The recent spike in prices of basic goods and services in the country has nothing to do with economic fundamentals, a Government Minister has said.

Responding to questions during the Questions and Answer session in the Senate chambers yesterday, the Deputy Minister in the Ministry of Finance and Economic Development Clemence Chiduwa said that the external and internal shocks impacted negatively on the economy and the Government was now in the process of managing these shocks.

“We have external and internal shocks and in our 2022 National Budget, we have anticipated these shocks. We are saying as a country, how do we manage these shocks, how do we address exchange rates and price increases. Price increases have nothing to do with economic fundamentals, but we are addressing the issue through various intervention measures,” said Deputy Minister Chiduwa.

The Deputy Minister further said that this season’s unfavourable weather conditions as well as unjustified price increases of goods and services also had a bearing on the economy. He said this had also been compounded by the Russia-Ukraine conflict.

Deputy Minister Chiduwa said that it was worrying that prices of goods and services were following black market exchange rates as people were taking decisions based on behavioural issues.

“We actually had a surplus. All this means that the wanton price increases have nothing to do with economic fundamentals. We have noted that prices are following black market exchange rates as people are taking decisions based on behavioural issues such as what happened in the past,” said Deputy Minister Chiduwa.

In recent weeks, prices of goods have skyrocketed as retailers are pegging their products against the parallel market exchange rate. The pegging of goods against the black market rate is in defiance of the Government’s directive that goods should be pegged against government’s official exchange rate.