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Prices of basic goods up 45%

Malawians are struggling to cope with the rapid cost of living, with a Consumer Association of Malawi (Cama) survey showing that prices for basic commodities such as bread, soap and cooking oil have gone up by an average of 45 percent in the past six months.

In an interview on Tuesday, Cama executive director John Kapito said what is worrisome is that government is doing nothing to contain the situation.

“All basic commodities are going up every day because both producers and suppliers are not sure about foreign exchange rates.

“This has cast a cloud of uncertainty in business people and government should invoke the Consumer Protection Act to protect the rights of people,” said Kapito.

Spot checks in Blantyre and Lilongwe on Tuesday confirmed the rise.

For example, a tablet of Lifebuoy weighing 200 grammes used to cost K280 but is now selling at K310; Blue Band Margarine weighing 1kg has also gone up from K800 to K1 100, Sunlight Powder weighing 100 grammes is now at K95 from K70 while a five-litre bottle of Kazinga is selling at K5 600 from K4 000.

In an interview, Unilever Malawi country director Raymond Banda said the rise in cost of raw materials necessitated the increase.

“It is true prices of our products have gone up as a result of the rise in cost of the raw materials. Much as we are trying to keep the prices affordable, we also need to recover our production costs,” he said.

Banda, however, said the company is ready to adjust the prices downwards if the prices of the raw materials go down.

A survey by Cama shows that the price of bread in September 2011 was K110, but it is now at K220, a 1kg packet of sugar has gone up from K185 to K220, a kg of meat has jumped from K880 to K900, a kilogramme of rice has risen from K285 to K300.

Minister of Trade and Industry John Bande said he was in Zambia and would call the reporter to comment on the issue, but he did not.

Minister of Information and Civic Education Patricia Kaliati could not pick up her phone.

A Lilongwe-based man, Robert Gama, said life is now unbearable to the extent that he was forced to stop drinking beer.

“My budget has almost doubled in recent months. Unfortunately, my salary has not been adjusted upwards in line with the cost of living,” said Gama.

Amanda Chikapa, of Blantyre’s populous Ndirande Township, agreed with Gama that life is now tough.

Chikapa attributes the rise in prices of commodities to lack of forex.

“When the country had forex, some small-scale traders used to bring in cheap commodities from neighbouring countries. This helped to keep prices low,” he said.

But President Bingu wa Mutharika is on record as saying government will not devalue the kwacha as doing so would hurt poor people owing to cost-push effects, defying the IMF and putting Malawi’s economic programme with the global lender that unlocks foreign aid on ice.

Authorities also fear that further devaluing the kwacha at a time when forex remains scarce will only succeed in pushing the black market rate higher—as was the case in August—as hard currency seekers, having failed to get forex from the formal market—turn to the parallel market in desperation.

Last August, when government softened the local currency by 10 percent to please the IMF only to earn low marks because the Bretton Wood institution wanted a more significant devaluation, both the Reserve Bank of Malawi (RBM) and the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) claimed that the move would not raise prices.

They argued that most businesses were already buying forex at a premium and that the 10 percent weakening had already been factored into their prices well before the kwacha’s forced fall. They were wrong.

At issue is the spread between the official exchange rate of K167 to the dollar and the black market price of K300 which, because of the forex scarcity in the country, is the rate at which most traders buy their forex either from the black market or through forward contracts with authorised dealer banks (ADBs).

The weaker kwacha, higher fuel prices and introduction of value-added tax (VAT) on previously exempted goods and services have conspired to push inflation—the average rise in prices—to double digits (currently at 10.4 percent) for the first time in three years.

The galloping inflation has eroded the value of consumer’s incomes at a time when wages and salaries, including the minimum wage, have remained the same over the turbulent period.

Malawi’s minimum wage hovers around K180 per day or K5 400 per month.

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