The price of bread has now gone above the US$1 per loaf mark for the first time since 2019 when the country grappled with the effects of a severe drought. Starting yesterday we received tips from our contacts at various tuckshops that Bakers Inn delivery trucks were now demanding more than US$1 per loaf of bread. Essentially what this means is bakeries were now charging a wholesale price of more than US1 which would ultimately mean tuckshops and retailers would end up charging a price of more than US$1 (the current price at most retail outlets) per loaf.

As already mentioned the last time superwhite bread from the big three bakeries (Lobels, Proton and Bakers Inn) cost more than US$1 per loaf was in 2019. Back then bread prices went as high as US$1.10 per loaf but bakers quickly learnt the hard way that hiking the price of bread did not necessarily led to an increase in profit as most people simply stopped buying bread because they couldn’t afford it.

Bread is now selling for as much as US$1.30

Lobels bread selling for close to US$1.30

A loaf of bread is now selling for an astounding US$1.30 or even as high as US$1.50 per loaf depending on which rate you use. If you are reading this from the U.S or some other foreign country this might not sound so shocking until you remember that the vast majority (well more than half) of Zimbabweans live below the poverty datum line. In fact, according to the latest data from the government agency, ZIMSTAT shows that a single person now needs around $11 000 ZWL in order for them to be able to afford basics and that was before this weekend’s spike in exchange rates. So yes, even civil servants, the largest employed group in this country will probably not be able to afford to eat bread every day.

Why this is happening?

Which begs the question, why are the bakers doing this? The prices shown here are way too high and beyond what an ordinary Zimbabwean will be able to afford so why even bother because just like in 2019 they are unlikely to boost their revenue at these prices. Well, it seems this is all tied to the recent changes in rates from the auction rate to the willing buyer willing seller rate. Bakeries are tired of being burnt by rate spikes such as those that we recently saw towards the start of this weekend. They want to be paid in USD too and they have been refusing to deliver to those shops who want to pay them in ZWL. The strange thing though is that our sources tell us even the USD price has been increased as we outlined above.

The bakeries are now following the example of the government which has allowed the Zimbabwe Schools Examination Council (ZIMSEC) to charge examination fees in US$.
It is not surprising that some bakeries are now demanding US$ for bread
Effie Ncube National Association of Consumer Rights spokesperson

Most of the woes and issues happening in Zimbabwe stem from the fact that the Zimbabwean government simply wants to thwart a market-based rate. They want to print as much ZWL as they want but keep the rate the same. The Zimbabwean government discovered a simple way to make money back in 1997 and since then they have striven to keep their printers working full time. They do not care much for the laws of economics which dictate that an increase in money supply will lead to a slide in the value of the local dollar. Back in the early 2000s, their misdeeds could be kept hidden thanks to antiquated communication systems over which they had a solid grip. Now in the world of social media and after dollarisation, any surge in money supply is quickly communicated by way of rate spikes.

One of the favourite party tricks they like is to feign ignorance. They claim they have “all the fundamentals” right and are surprised that the rate is going up. The governor of the Reserve Bank then pulls out his calculator and starts to spout out numbers that seem to prove he is right and everyone is wrong. The thing though is that eventually simply abandons its position and accepts the status quo. We saw this with the 1:1 rate, with the fixed interbank rate of 25 and now with the auction rate. Its all an act to protect the golden printer that spits out money.