The Malawi Confederation of Chambers of Commerce and Industry (MCCCI) says inflation outlook faces several risks, including lower-than-anticipated agricultural output from the 2024/25 farming season.
In its recent business review, the chamber also expects inflation during the year to remain elevated due to an increase in government spending as we approach the election cycle.
MCCCI said additionally, the 2025/26 national budget has a deficit of K2.47 trillion, equivalent to 9.5 percent of GDP (gross domestic product) which is to be financed domestically and, “as such, is likely to put upward pressure on prices through the money supply channel”.
Said the chamber in the review: “The high and persistent inflation in Malawi, especially in food and energy, combined with a large budget deficit and economic uncertainty, poses significant challenges to businesses.
“These include rising costs, reduced consumer demand, and limited access to affordable finance. Strategic planning, cost control, and adaptability will be critical for businesses to navigate this economic climate.”
According to the National Statistical Office (NSO), inflation remained elevated in the first quarter under review.
In January, inflation rose slightly to 28.5 percent from 28.1 percent in December. Thereafter, it inched further upwards to 30.7 percent in February before easing slightly to 30.5 percent in March, following the onset of the harvest season.
During the period, food inflation followed the same trend as overall inflation, rising to 36 percent in January and 38.5 percent in February before easing marginally to 37.7 percent in March.
On the other hand, non-food inflation followed an upward trend, with monthly rates of 16.9 percent, 18.5 percent, and 19.2 percent in January, February, and March, respectively.
The 2025/26 National Budget, which rolled out on April 1, was formulated based on the assumptions that inflation rate will average 23 percent and the economy will grow at 3.4 percent.
But the Reserve Bank of Malawi (RBM) has already revised the annual inflation rate projection to 27 percent and growth rate downgraded to 3.2 percent as inflation currently sits at 27.1 percent as of June this year, according to the National Statistical Office.
On its part, World Food Programme (WFP) said the country’s maize deficit is projected at 1.2 million tonnes (33 percent), considering post-harvest losses (of at least 11 percent), net import and export, seed requirement, animal feed, industrial use, and Strategic Grain Reserve (SGR) replenishment, against a national requirement of 3.7 million metric tonnes (MT).
According to WFP, The 2024/25 second-round of Agriculture Production Estimate Survey (Apes) for Malawi projects that 2.96 million MT of maize will be produced this season, a nine percent increase from the third-round Apes in 2024, and a 20 percent decrease from the five-year average.
This, according to WFP, is an indication that Malawi will likely not be self-sufficient during the next lean season.
Earlier, Malawi projected a maize deficit of 537 380 MT in the 2024/25 growing season with Parliament approving an allocation of K99.5 billion in the 2025/26 National Budget towards irrigation development to produce 337 000MT of maize on 56 113 hectares of irrigable land, which is still below the projected deficit.
At the same time, Ministry of Agriculture’s strategy to bank on irrigation to cover the maize deficit and stabilise prices this year has drawn criticism, with agriculture policy experts casting doubt on its practicality.
Lilongwe University of Agriculture and Natural Resources Centre for Agricultural Research and Development director Innocent Pangapanga-Phiri earlier said the maize deficit means unsustainable fiscal policy ahead, high prices and deepening poverty.
He said: “The deficit means tough and disastrous times ahead of us, more food-insecure households, including their members.
“Government may make an unpopular decision for the sake of the short-term voters’ confidence at the expense of the economy. Also deficit means we should expect high prices of maize in the country, which will become unaffordable for most rural and urban households.”
As part of the food component, maize contributes about 53.7 percent of the CPI, which means any movement in the price of maize has a direct bearing on consumers.
