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*Retailers Reduce Prices As Liquidity Crunch Bites*
https://www.pindula.co.zw/2022/09/16/retailers-reduce-prices-as-liquidity-crunch-bites/?article

Shops have reportedly started to reduce prices following a similar move by manufacturers who are reducing prices for goods supplied using forward pricing models.

The development follows plummeting consumer demand due to the prevailing liquidity crunch.

According to a Business Weekly report, some suppliers are now issuing credit notes to retailers so that they can reduce their prices.

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Shopowners are being given a choice either to be refunded or to get products worth the value of the note. An executive with a leading retail chain is quoted as saying:

_Retailers are now holding too much stock because no one is buying; it’s a combination of high prices because the suppliers had used forward costing models; and the prevailing liquidity crunch._

Retailers Association of Zimbabwe Denford Mutashu told Business Weekly on Wednesday that customer traffic into formal shops had declined by an average of 35 per cent. Said Mutashu:

_It’s critical for authorities to increase the injection of some liquidity into the market as the economy continues to contract._

_The economic growth projections may be somewhat a mirage._

_The velocity of money is key to any economy thriving to maintain its growth trajectory. There is a need to essentially balance the tight monetary trajectory with a necessity for effective demand._

In July the Reserve Bank of Zimbabwe (RBZ) introduced gold coins as an alternative to store value instead of US dollars.

Harare-based economist, Victor Bhoroma, said though prices were falling, demand for fast-moving consumer goods has also fallen as well. He said:

_It is true that prices are going down, consumer demand for fast-moving consumer goods has slumped and the free-market exchange rate has retreated._

_This is largely due to the non-payment of government contractors and suppliers and the mopping of excess liquidity by the central bank through daily and weekly Negotiable Certificates of Deposits (NCDs) to commercial banks locally._

_The interventions will not replace the need for a market-driven foreign exchange market and the need for the central bank to end all quasi-fiscal operations that lead to untenable money supply growth in the economy._

_Hence, it is necessary to give it time and assess Government’s sincerity to critical reforms that bring long-term economic stability._

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