One of the country’s biggest supermarket chains by market capitalisation OK Supermarkets says its sales volumes fell in the first quarter, amid rising inflation.
The chain says most of its sales are still in local currency, after the government allowed Zimbabweans to buy and sell using foreign currency.
In a trading update, OK Zimbabwe said sales volumes in the six months to September fell 26.9%, compared to the same period last year.
“Earnings did not keep pace with increases in prices and this, in addition to the effect of Covid-19, constrained demand. As a result sales volume for the period declined by 26.9% compared to the same period in prior year in an environment where aggregate demand has declined.”
The government lifted ban on the use of forex in trading however, OK says most of its own sales are still in Zimdollars, reflecting the real state of incomes in the economy.
“With effect from April 2020, the authorities allowed the US$ to be used to settle transactions alongside the ZWL. However, the Group’s sales remained predominantly in ZWL,” says OK.
Meanwhile, the informal sector is pegging its prices based on the rate of the day.
The forex auction system, introduced mid this year, has offered the formal sector better access to the foreign currency needed for imports.
“The authorities introduced the foreign currency auction system to allocate foreign currency, guided by economic priorities for the country. Between allocations from the auction and the foreign currency sales generated in the business, the Group was able to pay for all its import requirements,” OK says.
-Zwnews
