The Zimbabwe National Chamber of Commerce (ZNCC) has warned the government that imposing price controls will result in empty shop shelves experienced in 2007.
In April this year, the government ordered businesses to revert to March 25 pricing levels but the price moratorium has largely been ignored by retailers as prices continue to rise on the back of a weak currency.
In a new research document titled Sustainable and Market Friendly Interventions to Addressing Price Spiralling During The Lockdown, ZNCC said:
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As Zimbabwe National Chamber of Commerce (ZNCC), with membership across all the value chains of the economy, was not consulted when the decision on the price freeze was implemented … This is not the first time that price controls have been introduced in Zimbabwe. In 2007, the economy came to a halt due to price controls.
With products to be affected by the price moratorium set to include basic commodities; sugar, rice, maize meal, cooking oil, salt and bread, price freeze of these commodities may decrease product availability from manufacturers and producers which will spawn shortages on retail and wholesale shelves. The suppliers of the basic commodities have not reduced the prices as
ZNCC further stated that while the objective of price controls is to lower prices for consumers, controls distort market forces of supply and demand and can lead to serious shortages of goods and services.
Price controls also kill competition as it removes rivalry among businesses, ZNCC added.