The Economist Intelligence Unit (EIU) has projected that Malawi’s 2026 annual average inflation rate will rise to 29 percent due to the Middle East conflict induced by the imminent spike in fuel prices, among others.
The forecast by EIU, a subsidiary of UK’s Economist Group, comes at a time the United Nations (UN) and the World Bank have also expressed fear that the country’s recent inflation gains could be lost due to the impact of the ongoing US- Israel-Iran war.
The EIU report, also quoted in the Nico Asset Managers Monthly Economic Report for February, indicates that upside risks to inflation are expected to persist in 2026.
Reads the Nico report in part: “The EIU projects that inflation will rise slightly to 29 percent in 2026 and average 28.6 percent over 2026-2029, significantly higher than the previous forecast of 16.6 percent.”
The EIU’s 29 percent inflation rate forecast is almost double the current government projection of 15 percent and more than last year’s annual inflation rate of 28.4 percent.
In separate interviews, analysts are cautiously optimistic that moderate food prices could ensure inflation remains below last year’s levels.
University of Malawi economics lecturer Edward Leman said on Monday that overall, much will depend on the trajectory of global fuel prices, exchange rate stability and domestic food supply conditions.
“There are reasons for cautious optimism. Malawi’s inflation is predominantly food-driven and a favourable agricultural season could help ease pressures, potentially bringing the annual average slightly below last year’s 28.4 percent,” he said.
Consumers Association of Malawi executive director John Kapito said the speculative increases in global fuel prices will have a negative impact on economic growth targets and inflation projections, but the impact could be slightly cushioned by food prices.
“The impact will depend on the volume of the increases. However, assuming there will be any fuel increases, we hope much of it will be offset by lower food prices,” he said.
The World Bank and United Nations have expressed fear that increased costs of fertiliser and fuel due to the impact of the ongoing war poses fresh challenges on the local economy.
In a notice dated March 26 2026, the Bretton Woods institution said it is working with governments, the private sector, regional partners and other stakeholders to find solutions to the new set of challenges.
Economics Association of Malawi president Bertha Bangara-Chikadza is quoted by The Nation as having said a surge in fuel prices was likely to subject countries that rely on imports such as Malawi to inflationary pressures on essential goods, transport and manufacturing.
On the other hand, Reserve Bank of Malawi spokesperson Boston Maliketi Banda is on record as having said to contain the expected inflationary pressures, the central bank is ready to deploy appropriate monetary policy tools, including liquidity management and maintaining appropriate interest rate stance.
