Malawi’s year-on-year headline inflation rate has dropped for the second month in a row, hitting 29.2 percent in April, a development the Reserve Bank of Malawi (RBM) says means the monetary policy “tightening cycle has likely come to an end”.
The National Statistical Office (NSO) Consumer Price Index for April 2025 shows that the inflation rate dropped from 30.5 percent in March 2025, attributable to decelerating food prices although non-food inflation slightly picked up.
Reads the report in part: “Food inflation now stands at 35.8 percent from 37.7 percent observed in March 2025 while non-food inflation is at 19.4 percent from 19.2 percent over the same period.”
The 29.2 percent inflation rate for April this year is 3.1 percentage points lower than the rate during the corresponding period last year when it was recorded at 32.3 percent with food inflation at as high as 39.9 percent.
Meanwhile, RBM Deputy Governor Kisu Simwaka, writing on his Facebook page on Saturday, noted that inflation rate appears to have turned the corner, moving in the right direction and could compel monetary policy authorities to loosen policy stance.
He said: “On the policy front, this is a critical moment and on a preliminary basis, the tightening cycle has likely come to an end.
“Looking ahead, inflation is expected to decline further in the coming months supported by improved food availability.”
But Simwaka expressed worry that it will likely take long for inflation to drop further to single digit, which is the RBM’s long-term objective.
Malawi’s inflation rate was last in single digit at 9.8 percent in October 2021, according to NSO data.
In an interview yesterday, capital market analyst Cosmas Chigwe observed that although inflation pressure is easing, it will remain elevated in 2025 because of the macroeconomic realities the country faces.
He said: “While headline inflation is showing signs of easing, the fiscal impulse expected from general election-related expenditure could exert upward pressure on aggregate demand and fuel inflationary expectations..”
Chigwe said the private sector needs access to affordable capital, adding that he hopes monetary and fiscal authorities will adopt a coordinated approach to deal with inflation in the medium-term.
Consumers Association of Malawi executive director John Kapito said yesterday that the easing of inflation could be temporary.
He urged the RBM to keep on monitoring key economic sectors to ensure that there is macroeconomic stability.
Speaking at a Monetary Policy Technical Forum in Lilongwe on Tuesday last week, Economics Association of Malawi executive director Esmie Kanyumbu cautioned RBM against over-reliance on policy rate hikes to curb inflation, urging complementary structural and fiscal reforms to boost production.
“Aside from using the policy rate, the central bank should prioritise efforts to ensure that there is financing to the real economy,” she said.
Kanyumbu also questioned the reliability of RBM’s inflation projections, citing the likelihood of persistent structural risks as the country moves closer to the September 16 General Election.
She said: “Maize prices are expected to remain high in 2025 and fiscal pressures are likely to intensify as we approach the polls.”
In its second Monetary Policy (MPC) Statement for this year, the Monetary Policy Committee maintained policy rate at 26 percent and projected annual inflation to slow down to 27 percent in 2025 from 32.2 percent in 2024.
Reads the MPC minutes in part: “The committee noted that inflationary pressures have moderated. However, risks remain, including those stemming from low agricultural output and fiscal imbalances.
“The MPC reaffirmed its earlier position that the current monetary policy stance is sufficiently tight to steer inflation downwards toward the medium-term objective, supported by targeted supply-side interventions and fiscal consolidation.”
