When Covering Your Costs is a Crime

Two businessmen served the second day of their four-month prison sentence in Zimbabwe today. Their crime? increasing the price of a loaf of bread from 185 Zimbabwean dollars (US$ 0.74) to 300 Zimbabwean dollars (US$ 1.20) without the approval of the Trade and Industry Ministry.

As inflation continues to rise to incredible heights, President Robert Mugabe’s government has resorted to criminal procedures against company directors guilty of violating the “Pricing of Goods Act,” which requires governmental approval for price changes. But it is the baking industry that has particularly suffered from the price controls, which only cover certain goods, bread included.

Bakers complain that the government-enforced prices do not account for the massive price increases for inputs such as sugar, flour, and fats. South African news site, IOL, reported that, input prices included, the real price of a loaf of bread should be around 800 Zimbabwean dollars.

With the price of bread below production cost, bakers have had to get creative to cut costs:

Bakers battled to trim production costs by phasing out printed packaging with their brand names, finding inferior ingredients, blending flour with corn meal and shutting down slicing machines, it said.

Moreover, the BBC reported that shops are instead starting to stock buns and scones which are not covered by government controls.

But it also reported that shops are running out of bread, and many small bakeries have been closing down.

With inflation over 1000%, its seems that Mugabe’s government and the people of Zimbabwe are fighting a tough battle, but from different sides.