The government says it will not control the prices of commodities which have risen sharply in the past week following the promulgation of Statutory Instrument (SI) 127 of 2021.
SI 127 of 2021 seeks to regulate foreign currency exchanges by banning business operators from charging above the official exchange rate.
The measures also empower authorities to punish those that refuse to take the Zimbabwe dollar for local transactions.
Responding to legislators who had raised concerns over continued price hikes of basic commodities in the National Assembly on Thursday, Finance deputy minister Clemence Chiduwa said the government would allow the market to regulate itself. He said:
I would like to assure the House that we are not going to control prices. We will allow businesses to thrive and come up with their own pricing models but what is very critical in economics is effective demand.
You can increase prices the way you want, but what is critical is effective demand.
When you have increased your prices, are people going to buy? You can only buy where there is no choice but look at how the Zimbabwean economy is dichotomised between the informal and formal sector.
Price controls are not going to assist us as a country, they will take us back but as I have mentioned, there is the issue of effective demand and then the issue of import parity.
Chidawu also defended the forex use measures saying they protect consumers from abuse by unscrupulous businesses.
He said price stability will soon be achieved and the prices will actually start to go down within the next few weeks.