THE business community was last week surprised when government allowed price reviews, but the big question that every industrialist and entrepreneur was asking was whether they would ever recover from the two-and-a-half-month price blitz.

The devastating effects of the price freeze exercise have been felt across all sectors of the economy, with government being the latest to realise the blitz had hit its sources of revenue.

Business lost over $40 trillion since government declared war on big business. As a result government lost $13,1 trillion in revenue and that is when the warning bells sounded, prompting a rapid policy shift on the matter.

However, the decision to review prices has been received with mixed feelings by manufacturers, consumers and government officials alike.

Economist Eric Bloch lamented the appalling consequences of government's price controls over the past nine weeks.

"The magnitude of the damage that has been done, and which is continuing to be suffered, is as immense, if not greater, than the abysmal harm caused by the most pronounced tsunamis," said Bloch.

Shelves in stores throughout Zimbabwe have been emptied of basic goods after producers reacted to the government's order to freeze prices by simply ceasing production.

President Robert Mugabe, although he has not commented on the latest reviews, was confident that the situation would remain normal.

In a speech last month, Mugabe denied that the price freeze would prove a flop and accused manufacturers who claimed that production was no longer viable of being part of a Western plot to topple his government.

"We are saying to all factory owners you must produce," Mugabe said.

"If you do not produce, we certainly will seize and nationalise firms which were profiteering excessively in a bid to incite Zimbabweans to revolt against the state," he said.

A director who was arrested during the price blitz said business was not going to recover overnight in a "non-performing economy".

"If the prices were pegged in line with their cost build-up it would have benefited the consumer, manufacturer, business and the economy," said the director who spoke on condition of anonymity.

"Manufacturers had to discontinue, or reduce, production in order to minimise losses. As a result, almost all businesses have sustained immense losses and consumers are still struggling to survive in view of the near-total non-availability of essentials."

He said there was now a more vigorous and virile black market than previously existed due to the intensity of demand in the absence of goods in the formal market, which could take months to reverse.

"With demand massively exceeding supply, black market merchants are able to command prices very considerably greater than those which were being charged by retailers prior to the controls being introduced," he said.

"Thus, instead of reducing inflation, government has caused real inflation to soar as business will struggle to improve until December."

Economic analysts said the failure by the cabinet taskforce to come up with a pricing structure will result in a sharp decrease in revenues for government, with markedly lesser value-added tax (VAT) in view of lower sales by businesses.

It would also result in decreased Pay As You Earn (PAYE) inflows as businesses progressively reduce numbers of employees, and reduced Customs Duty as values of imports decrease.

In a major policy u-turn after realising that it had shot itself in the foot, government approved increases in the prices of goods ranging from foodstuffs, soap, farming inputs and tyres to improve supplies on the market.

Adjustments for train and airfares, telecommunications and freight tariffs were also approved.

Foodstuffs whose prices were increased include sugar, tea leaves, chicken and bicarbonate of soda. The prices of Geisha bath soap, Cobra floor polish, Key bar laundry soap, Omo washing powder and blankets were reviewed upwards.

Farming inputs whose prices were reviewed include maize seed. Prices of motor vehicle tyres and Bata shoes were also increased.

Government said the benchmark for all other prices of commodities not covered by the review remain at June 18 levels until further notice.

Chairman of the Cabinet Taskforce on Price Monitoring and Stabilisation, Obert Mpofu, said retailers would be allowed to put a maximum mark up of 20% and charge VAT of 15% on a commodity.

For example, a retailer who gets a product from a supplier at $100 000 will sell the product at a maximum price of $138 000 per item.