Inflation soars to 21.3% in June

Malawi’s year-on-year headline inflation rate for June 2015 has climbed by 1.8 percentage points to 21.3 percent from 19.5 percent in May 2015, the Reserve Bank of Malawi (RBM) data showed yesterday.

The inflation rate measures a broad rise or fall in prices that consumers pay for a standard basket of goods.

This rise in inflation should not surprise anybody as experts have warned in several forecasts that the inflation rate is bound to go up and remain high, triggered by soaring high cost of food and low maize output.

Last month, a Blantyre-based investment advisory firm Nico Asset Managers also predicted that inflation will remain elevated as a result of rising food prices from lower than expected harvest which this year has dipped by 27 percent.

Maize, as part of food, has a huge weight at 50.2 percent in the consumer price index (CPI) that measures changes in the price level of a market basket of consumer goods and services purchased by households.

On the global market, recovering global oil prices are also said to have an impact on inflation, a local economist told Business News.

June inflation figures now means the inflation rate in the country has averaged 14.52 percent from 2001. Inflation reached an all-time high of 37.90 percent in February 2013 and a record low of 6.30 percent in December 2010.

The rise in inflation means disposable income for spending and investment will shrink further, thereby eroding the purchasing power.

June figures will disappoint Minister of Finance, Economic Planning and Development Goodall Gondwe who seeks to achieve single-digit inflation rate in two to three years time.

Gondwe has set the inflation target for this fiscal year at 15 percent and an inferred December target of 12 percent.