Malawi faces renewed inflationary and foreign exchange pressures as the World Bank projects a 23 percent increase in global commodity prices this year driven by escalating geopolitical conflicts and adverse weather conditions.
In its October 2026 Commodity Markets Outlook, the World Bank forecasts a 32 percent rise in energy prices and a 10 percent rise in food commodity prices, a development that threatens import-dependent economies such as Malawi.
Scotland-based Malawian economist Veli Nyirongo said rising global oil prices pose immediates threat to Malawi because of the country’s dependence on imported petroleum products.
“Malawi imports most of its petroleum products, so any disruption to global oil supply or rise in prices directly increases domestic inflation, transport costs and production expenses,” he said.
Nyirongo said higher fuel costs spread across agriculture, manufacturing and distribution, increases import expenditure and demand for scarce foreign exchange.
The warning comes as the Reserve Bank of Malawi (RBM) acknowledges persistent imported inflation despite recent improvements in headline inflation.
In its October 28 Monetary Policy Committee (MPC) Statement, the central bank reported that inflation rate declined to 20.1 percent in the third quarter from 22.9 percent in the preceding quarter largely reflecting improved food availability.
However, non-food inflation remained elevated at 31.9 percent.
The central bank has maintained the 2026 annual inflation projection at 22 percent from 28.4 percent in 2025.
But RBM has revised its 2027 inflation forecast upwards to 20 percent from 18.5 percent, citing geopolitical tensions and the increased likelihood of El Niño conditions.
“Premature easing could, however, risk reversing the progress made in reducing inflation and anchoring expectations,” reads the MPC statement.
The committee maintained the policy rate, the rate at which commercial banks borrow from the central bank as the lender of last resort, at 24 percent while raising the Lombard rate, the rate for stressed banks, to 26 percent to strengthen liquidity management.
Centre for Agricultural Research and Development research fellow Patrick Chimseu, in an interview yesterday, cautioned that persistent non-food inflation can reverse declining food inflation through higher production and distribution costs.
“These supply-side pressures can reinforce inflation even when domestic demand remains weak,” he said.
Chimseu cited research conducted jointly with African Network of Agricultural Policy Research Institutes showing that fertiliser prices increased from below K50 000 per 50 kilogramme (kg) bag to about K180 000 per 50kg bag over four growing seasons.
He said expensive agricultural inputs, transport costs and public borrowing could discourage investment and reduce production, placing renewed pressure on food prices.
The World Bank’s baseline forecasts assume no major escalation of conflicts affecting global commodity supplies.
