Financial strain, joblessness rise amid cost of living crisis

The continued rising cost of living is leaving more Malawians in economic dilemma, a development the Centre for Social Concern (CfSC) warns could lead to financial strain and rising unemployment.

CfSC says  businesses continue to face higher operating costs due to inflation, resulting in cutting back on hiring or even laying off workers. 

In its recent analysis of the Basic Needs Basket, the centre says Malawi faces economic dilemma as cost of living shows no signs of retreat.

Reads the analysis in part: “Rising prices for essential goods and services, such as food, housing, healthcare, and transportation, put significant financial strain on individuals and families.

“This leads to increased debt, reduced savings, and a decreased ability to invest in education or business opportunities.”

For instance, between June and July 2023, the average cost of living increased by 4.5 percent from K378 812 in June to K395 993 in July with Blantyre emerging as the most expensive city at K452 013.

The main contributor to this increased cost of living is an increase in the maize prices in all the markets with CfSC data indicating that on average, between June and July 2023, maize prices increased by 26.2 percent.

The highest rise being Mangochi where maize prices increased by 40 percent from K27 000 in June to K38 000 in July per 50 kg bag.

In Karonga, maize prices increased by eight percent, from K25 000 in June to K27 000 per 50 kg bag in July.

Such is the dilemma being faced by Agness Chilimampunga, a single mother of two, who earns K60 000 per month working in a beauty salon.

“This money is not enough to cater for our basic needs. I am forced to even work on Sunday to earn an extra K5 000 but it is not getting better.”

In an interview, economist Bond Mtembezeka said to navigate the situation, households must optimise their budgets further.

He said: “But that has an implication where it can stall an economy due to depressed aggregate demand.

“Nevertheless, the most important thing is for government to put in place both fiscal and monetary policies that support the economy and ensure that inflation starts coming down.”

Consumers Association of Malawi executive director John Kapito said the high cost of living will keep hurting consumers, industries and even government as it will be unable to collect taxes from the falling businesses.

He said: “It is unfortunate that the current situation offers no hope to consumers and it will get even worse as we go into the lean period.