Fuel, food push down inflation rate to 23.7%
The country’s inflation rate has fallen by 0.8 percent from 24.5 percent age points in August to 23.7 percent in September due to a decline in costs of cereals and a decrease in fuel prices.
The National Statistical Office, (NSO) recent stats flash shows that Malawi’s year-on-year headline inflation in September shed off 0.8 percentage point compared to the previous month which is higher than the 21.7 percent recorded during the same period last year.
NSO has also said urban and rural rates stood at 30.9 percent and 19.8 percent respectively while food inflation—the main component of the country’s consumer price index (CPI)—stood at 22.7 percent from 24.1 percent in August 2014.
Faced with threats of food shortage and imported inflation due to the depreciating local currency against the dollar, Malawi’s inflation rate rose to 24.5 percent in August —way above the country’s monetary authority’s target after experiencing a downward trend since February this year.
Due to the upward trend in inflation, forecasting and advisory services provider, the Economist Intelligence Unit (EIU) raised Malawi’s 2014 inflation rate average to 22.8 percent from 19.6 percent compared to 28.6 percent last year. The International Monetary Fund (IMF) also ruled out the achievement of a single digit inflation this year.
The Reserve Bank of Malawi (RBM) expects inflation to fall to 20.5 percent by December this year compared to 23.5 percent at the end of year in 2013 while the inflation rate is expected to fall to 15 percent by end of this fiscal year.
Earlier this year, the Monetary Policy Committee (MPC) meeting noted that the deceleration in inflation could have been faster had the automatic pricing mechanism (APM) for fuel had been implemented consistently.
But in September, after last revising prices in February this year, the Malawi Energy Regulatory Authority (Mera) announced a cut on fuel pump prices—diesel and petrol—by an average five percent, a move that NSO has said has helped to push down the month’s inflation.
The pump price for diesel was reduced by 5.6 percent from K853.40 to K805.50 per litre while the price for petrol was cut by about 5.1 percent from K839 to K796.20 per litre.
