September inflation rate softens to 21.2%

For a second month in a row, Malawi’s headline inflation rate has continued on a downward trend, with the September 2016 rate recorded at 21.6 percent, according to the National Statistical Office (NSO).

The inflation rate has slightly dropped by 1.6 percentage points from last month’s 22.8 percent largely because of a decline in food inflation, which slowed to 27 percent in September from 28.7 percent the month before.

In September last year, inflation rate was at 24.1 percent.

With the latest figures, it means that inflation rate is now 1.2 percentage points above the annual target of 21 percent set by the Reserve Bank of Malawi (RBM) in January, but 4.2 percentage points below the revised annual target of 25.4 percent set in the fourth monetary policy statement.

On the other hand, non-food inflation also registered a decline to 15.9 percent from 17.7 percent the previous month.

Maize, as part of food, is the main driver of Malawi’s inflation rate, and in recent months, the price of maize has continued to soften on the market.

A snap survey in Blantyre and other places showed that maize prices have remained stable at an average of K12 000 per 50 kilogramme (kg) bag of maize while in some parts of Zomba, the same bag is selling at K11 000.

Malawi is currently grappling with a 12.4 percent maize deficit relative to last year due to El Nino-induced drought that hit the country.

Grain Traders Association of Malawi president, Grace Mhango, is on record as having said that maize prices have stablised over the past few months.

In its September 2016 Economic Brief, Nico Asset Managers Limited said inflation is expected to remain high in the short-term due to low availability of food crops during the post-harvest period and the depreciation of the currency.

In a statement in August this year, RBM Governor Charles Chuka said the central bank will focus on containing second round effects from food inflation. n