In recent weeks, shoppers in Zimbabwe have noticed a subtle yet significant change at the bread aisle of major supermarkets. The price of a standard loaf has quietly increased from US$1 to US$1.10 in many stores, marking a return to prices last seen at the beginning of the year. This shift comes just months after bakers reduced prices in response to public outcry and government pressure. However, the current situation is more nuanced than it may appear at first glance.

A Brief History of Bread Pricing

To understand the context of this price increase, we need to look back at the events of early 2024. In January, bakers across Zimbabwe raised the price of bread to US$1.10, citing increased production costs for key ingredients like flour and cooking oil. This move was met with significant resistance from consumers, as our research over the past five years has consistently shown that most Zimbabweans consider US$1 to be the fair price for a standard 700g loaf of bread.

The price hike led to a sharp decline in demand, forcing bakers to reconsider their strategy. Under pressure from both the market and the government, they eventually reduced the price back to US$1 per loaf. This price point has remained stable for approximately seven months, until now.

The Current Situation

Our recent survey of supermarkets revealed that the majority are no longer selling bread at US$1. Instead, prices have crept up to around US$1.10 per loaf. However, there are several key differences between this price increase and the one we saw at the beginning of the year:

Limited to Supermarkets: The price increase appears to be confined to supermarkets. Tuckshops and informal vendors are still selling bread at US$1 or even lower in some cases.
Bakers Not Involved: Unlike the January price hike, this increase does not seem to be driven by the bakers themselves. In an interview with an executive from one of Harare’s largest bakeries, we were told that they had not changed their wholesale prices to supermarkets.
Consumer Indifference: Surprisingly, most shoppers we spoke to hadn’t even noticed the price change until they checked their receipts. This lack of outcry is in stark contrast to the reaction seen earlier in the year.

The OK Supermarket Conundrum

During our investigation, we uncovered some questionable practices at OK Supermarket. While shelf labels displayed a price of US$1 for most bread brands, the actual price charged at the till was US$1.10. This discrepancy was particularly noticeable with Mr Chingwa bread, where we were charged US$1.10 despite the shelf price showing US$1.

Interestingly, not all OK branches seem to be implementing this price increase uniformly. At another OK shop on the same day, we were charged US$1 for Bakers Inn bread. This inconsistency raises questions about the supermarket’s pricing strategy and transparency.

The Black Market Factor

The muted reaction to this price increase can be partially explained by the ongoing dynamics of Zimbabwe’s informal economy. As we reported last week, some enterprising black market traders have been using bread as a form of currency arbitrage. They purchase bread using ZiG bank cards at the official rate (equivalent to about US$0.58 on the black market), then sell it for US$0.80 cash, making a significant profit.

Even with the supermarket price increase to US$1.10, which translates to roughly US$0.70 at unofficial exchange rates, these traders can still make a profit of US$0.30 per loaf when selling for cash outside the shop. This ongoing arbitrage opportunity means that for many Zimbabweans, bread remains affordable despite the apparent price hike.

Learn more about how black market traders are using bread as currency

Frequently Asked Questions

Why are only supermarkets increasing bread prices?
Supermarkets may be attempting to increase their profit margins or discourage bulk buying by informal traders. However, the exact reasons remain unclear.
Are bakers making more money from this price increase?
No, according to our sources, bakers have not increased their wholesale prices. The price hike appears to be initiated by the supermarkets themselves.
Why aren’t consumers protesting this price increase?
Many consumers are still able to purchase bread at US$1 or less from tuckshops and informal vendors. Additionally, those using ZiG to make purchases are effectively paying less than US$1 per loaf due to exchange rate differences.
Is this price increase legal?
While the price increase itself is not illegal, the discrepancy between shelf prices and till prices at some supermarkets could be considered misleading to consumers.

Conclusion

The recent increase in bread prices at Zimbabwean supermarkets is a complex issue that reflects the broader economic challenges facing the country. While on the surface it may appear to be a straightforward price hike, the reality is far more nuanced. The interplay between official and unofficial exchange rates, the role of informal traders, and the varying practices of different retailers all contribute to a situation where the true cost of bread is not always clear.

As Zimbabwe continues to navigate its economic challenges, it’s likely that we’ll see more such complexities in pricing and consumer behaviour. At Zimpricecheck, we remain committed to monitoring these trends and providing clear, accurate information to our readers.