In the midst of a cost of living crisis, experts have said 2025 could be one of the toughest years for consumers as they continued to grapple with prolonged economic strain due to rising living expenses that have diminished purchasing power and altered spending behaviours.
During the year, the cost of essential items continued to rise amid persistent high inflation recorded at 27.9 percent in November while wage increases have not kept pace.
The amount of money required for a typical household to meet the monthly survival needs as monitored by the United Nations World Food Programme (WFP) Survival Minimum Expenditure Basket (Smeb) stood at K237 500 in October 2025.
Compiled by WFP since April 2020, Smeb represents the minimum cost required to meet basic food and non-food needs through market purchases over a period of a month. The food commodities used in calculating Smeb are those that make up a traditional rural and urban diet.
The minimum wage, currently at K126 000 per month for employees in formal employment and K72 800 for domestic workers, was last reviewed in June this year. This is against a cost of living for a family of six per month of close to K1 million.
Centre for Social Concern (CfSC) economic governance officer Agnes Nyirongo observes that the cumulative effect of these increases has been particularly harsh for low-income earners.
She said because of this situation, households have been forced to reduce the quantity and nutritional quality of their meals, often prioritising food expenditure over critical needs such as healthcare, education and sanitation.
Said Nyirongo: “With wages remaining stagnant and purchasing power eroding, urban households who depend almost entirely on market purchases are feeling the heaviest burden.
“The situation highlights deepening economic vulnerabilities at household level, especially in cities where there are limited opportunities for subsistence farming.”
But employers insisted that individual firms will have to respond to the situation depending on their productivity, profitability and affordability of the wages and benefits to be offered to the employees.
Employers Consultative Association of Malawi executive director George Khaki said to increase the wages, employers also need to look at several factors, including productivity rates of the employees, profitability rates of the employers and affordability of the wages.
He said: “Wages cannot be looked at in isolation. We must understand that the current operating economic environment with high inflation, shortage of foreign exchange, high interest rates and shortage of fuel are also impacting on the productivity of employers.”
But the stance by the employers did little to change the mindset of workers who are burdened by the rising costs against stagnated incomes and are being subjected to the worst cost of living crisis.
Malawi Congress of Trade Unions president Charles Kumchenga said they have on a number of occasions urged government to intervene to stabilise the economy.
“This situation has led to most companies closing down and cutting jobs across the key economic sectors of our country,” he said.
While employers and workers were hoping for some relief in the 2025/26 Mid-Year Budget Review, Minister of Finance, Economic Planning and Decentralisation Joseph Mwanamvekha announced new taxes that he said were meant to cushion such low-income earners.
Under the new tax regime, the zero Pay As You Earn (Paye) bracket has slightly increased from K150 000 to K170 000.
Those earning between K170 000 and K1.57 million are now taxed at 30 percent, up from 25 percent.
Incomes of up to K10 million are now taxed at 35 percent while those earning beyond K10 million will face a 40 percent tax.
Value Added Tax (VAT) jumped from 16.5 percent to 17.5 percent, a six percent jump, while the Malawi Revenue Authority will now be collecting rental income on residential property.
Mwanamvekha justified the new tax measures, saying they were adopted after careful consideration and that Treasury was deliberately ensuring that those with a higher ability to pay should contribute more towards rebuilding the economy.
He said it was not correct that the revised Paye structure will disproportionately affect low-income earners, stressing that those earning less are better off than they were in the previous tax regime.
Despite his justification, consumers were of the view that the new taxes will raise the prices of goods and services, thereby exacerbating the situation for consumers who are already struggling with the rising cost of living.
On the other hand, Consumers Association of Malawi executive director John Kapito observed that the tax increases are “poverty-inducing”, adding that enacting such measures at a time many Malawians are experiencing economic challenges is a grave mistake.
He said in the face of food insecurity, currency depreciation, fuel price volatility and high unemployment, households have less resilience to absorb new taxes.
Kapito said to balance revenue mobilisation with social protection, tax reforms should be accompanied by deliberate efforts to lower inflation, stabilise the kwacha, strengthen food security and create jobs.
He said: “The cost of a basic food basket for an average Malawian household has risen sharply and the additional K20 000 cushion provided by the new tax-free threshold is quickly consumed by higher market prices.
“Salaries that previously fell within the 25 percent bracket may now be taxed at 30 percent, reducing the disposable income for civil servants, private sector employees and small and medium enterprises.”
But, all hope is not lost. For the first time since June 2025, inflation rate eased in November to 27.9 percent from 29.1 percent mainly driven by a drop in food prices, according to National Statistical Office.
The International Food Policy Research Institute Maize Price Monthly Report indicated that the staple grain’s average retail price dropped by six percent in November from K1 238 per kilogramme (kg) in October to K1 168 per kg.
Maize, as part of the food component, accounts for about 53.7 percent in the consumer price index, an aggregate basket for computing inflation. This means that any movement in the price of maize either way has a bearing on the cost of food.
International Labour Organisation (ILO) earlier said while statutory minimum wages serve as key tools to address low pay and wage inequality thus promoting social justice, between 1995 and 2022, the real value of minimum wages averaged across low-income countries, including Malawi fell by 44 per cent in real terms.
ILO Minimum Wage Fixing Convention 1970 specifies that minimum wage levels should take into account both the needs of workers and their families and economic factors, including the requirements of economic development and levels of productivity.
