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HUGE RISE IN THE COST OF THE FOOD BASKET: LOWER AND STABLE FOOD COSTS MUST REMAIN CENTRAL TO DEVELOPMENT STRATEGY Zambia’s economy has remained seriously vulnerable to external pressures such as oil prices at the international market. This vulnerability to external fuel costs found expression in the recent upward adjustments of fuel announced by the Energy Regulation Board. But the Jesuit Centre for Theological Reflection asks if the whole issue is truly beyond Zambia’s control. Are there areas that can be explored to bring the cost to appropriate levels? What about the issue of internal arrangements regarding taxation? What about prompt movement towards on-going initiatives concerning bio-diesel? The impact of fuel price increases is well known. For example, the Bank of Zambia Governor did observe the difficulty of maintaining a single-digit inflation rate in the face of high fuel prices. While the impact of the fuel price change in mid-January cannot be a conclusive explanation to price changes observed in the cost of some basic needs for the month of January, it is true to say that the impact has been felt by consumers in meeting transportation costs, bus fares. One important observation to make is that players in different markets have an intuitive inclination to adjust upwards prices of goods and services following any fuel price increase. This behaviour has at times resulted in price increases that are significantly disproportionate to rises in the cost of fuel. This can be said to be the case for the recently hiked bus fares. Research over the past two years on Lusaka bus fares related to fuel prices reveals as follows: At most bus fare from Matero to town should cost approximately K2000, for Chilenje-Town should cost approximately K2,200 and Chelston-Town approximately K2,400. Bus operators are currently charging K2100 for Matero, K2400 for Chilenje and K2700 for Chelston. “JCTR hopes for a reduction in bus fares, especially if fuel prices are reduced,” says Chris Petrauskis of the Social Conditions Research Project of the JCTR. According to the JCTR Basic Needs Basket (BNB) that measures cost of living for a family of six, there has been an upward adjustment in the cost of basic needs in urban areas of Lusaka, Ndola and Luanshya. In Lusaka the cost of basic food in January was K506, 250 compared to K476,250 in December. In Ndola it was K590,260 and Luanshya K516,250. The main source of the increase is kapenta, in addition to small increases in green vegetables, tomatoes, onion and breakfast mealie. The explanation to the behaviour of these prices relates to reduce availability of these items on the market due to, for example, difficulties associated with growing vegetables (rape) in the rainy season and the effects of the ban on fishing activities in the case of kapenta. When it comes to essential non-food items, which is another component of the Basic Needs Basket, increases have been noted in the price of charcoal. In Lusaka for example, charcoal packed in a 90 Kg bag is averaging K53,000 in cost compared to K43,000 in December. Like green vegetables, tomatoes and onion, the price of charcoal is influenced by the rainy season. It is indeed difficult to produce and transport charcoal during this time of the year. At the centre of Zambia’s development strategy must remain the focus of people having access to food or producing enough for both food and income security. This is very important in assessing policy performance, budget formulation, investment decisions, etc. Government in its Fifth National Development Plan (FNDP) has recognised this imperative of assuring food and income security. That is why it has set itself a very ambitious programme that hopes to give rise to food security for the majority of households with at least 90 percent of the Zambian population being food secure, including increasing incomes for those in the agricultural sector. This is expected to happen by 2010. Whether or not we meet this goal -- something very related to the BNB -- will be clearer this coming Friday 09 February 2007 when the Minister of Finance and National Planning presents the national Budget. This will show how resources will be mobilised and on what priority areas those resources will be spent. That is why the JCTR believes that the Budget is a moral declaration as well as a financial document. |
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