January inflation soars to 8.1%

Malawi’s year-on-year inflation rate for January 2018 soared by one percentage point to 8.1 percent from the previous month’s 7.1 percent, published figures from the National Statistical Office (NSO) showed yesterday.

On a month-on-month basis, inflation during the same period was recorded at 4.5 percent with food inflation rate at 8.4 percent while non-food inflation was recorded at 1.4 percent.

At the current revised weight, food constitute 45.2 percent in the CPI, prior to January, food contribution to the consumer price index (CPI) has been at 50.1 percent.

In its accompanying press statement, NSO said the current revised CPI weights, are based on monetary expenditures relating to consumption for all households across the country.

“The index weights are based on expenditures of both urban and rural households derived from the Fourth Integrated Household Survey (IHS4) which was conducted in 2016/2017. The price reference period is December 2017,” reads the statement in part.

According to NSO, in the review month, food and non-food inflation rate stood at 7.6 percent and 9.6 percent respectively.

In its February Economic Newsletter however, Malawi Stock Exchange (MSE)-listed National Bank of Malawi (NBM) observed that while the decline in food inflation has been the major driving factor in the downward trajectory taken by inflation in the year just ended, electricity tariff hike coupled with pressure to increase liquid petroleum product and rising maize prices remains a risk to attaining the target.

“This upward pressure in non-food inflation is likely to intensify with the approved 24 percent electricity tariff hike coupled with pressure to increase liquid petroleum product prices with the adoption of more expensive premium environmentally friendly liquid fuel products and the inclusion of Jet –A1 fuel in the Fuel Price Stabilisation Fund,” said the bank in the newsletter.

Economics Association of Malawi (Ecama) executive director MalekaThula is on record as having said the increase in maize prices has the potential to reverse the path of inflation dynamics in the country, but the actual impact remains unclear in the meantime.

During the same period last year, headline inflation rate for January was recorded at 18.2 percent.