Mozambique: Bakers Unilaterally Increase Price of Bread

Maputo — Some bakers in Maputo and in the neighbouring city of Matola have unilaterally decided to increase the price of bread since Friday last week, a move which has a severe impact on the purchasing power of poor urban households.

Prior to the price increase, a standard 160 gram loaf of bread sold for 10 meticais (about 15 US cents at the current exchange rate). Some bakers have increased the price to 11 meticais, same to 11.5 and some to 12 meticais. Those who kept the price unchanged have reduced the weight of the loaf.

Recently, the Mozambican Bakers' Association (AMOPAO) complained publicly about the need to increase the price as a result of the high costs of production. They claimed that the price of wheat flour had risen three times since the start of 2020. A sack of 50 kilos of wheat flour, which milling companies sold for 1,120 meticais in January, had risen to 1,800 meticais.

Briefing reporters on Tuesday in Maputo at its fortnightly press conference, the spokesperson for the National Inspectorate of Economic Activities (INAE), Veronio Duvane, said several teams of inspectors have been dispatched to the ground, after information about the price increase.

"Right now, we have inspectors on ground across the country verifying the reasons behind the unilateral increase in the price," Duvane said, adding that every baker who fails to justify the move plausibly will be obliged to reduce the price, because the government is still working with AMOPAO.

He stressed that some bakers across the country were not affiliated to AMOPAO, but declined to affirm whether those who hiked the prices were the non-affiliated. After the work underway, INAE will share further details during the coming week, he promised.

The Minister of Industry and Trade, Carlos Mesquita, said in 2020 that the government, in partnership with AMOPAO, had been analysing the production costs in an effort to find alternatives. The bakeries had pointed out the continued depreciation of Mozambican currency, the metical, which made it more expensive to import raw material.

That argument, however, will no longer work, since in recent weeks, the metical has undergone a sharp appreciation against the US dollar and all other major currencies. Hence the cost of imported materials, such as wheat flour, when expressed in meticais, should now be declining.

The rate of appreciation has been extraordinary. A couple of weeks ago, the metical was trading at almost 75 to the US dollar. But now, the rate is about 62 meticais to the dollar.

Duvane also announced that INAE has fined more than 60 gymnasiums across the country for operating clandestinely, in defiance of the government's order that all gyms must close in order to slow the spread of the Covid-19 respiratory disease. All these gyms have now been closed, Duvane declared.

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