Inflation now at 19.5%, to frustrate authorities forecast

Malawi’s year-on-year inflation for May 2015 quickened by 0.7 percentage points to 19.5 percent in May from 18.8 percent the month before, putting to question government’s optimism to reduce the rate to 16.5 percent this year.

However, the inflation rate for May 2015 is better compared to that of the same period last year which stood at 22.6 percent, according to National Statistical Office (NSO) figures.

Minister of Finance, Economic Planning and Development Goodall Gondwe, when presenting the 2015/16 proposed national budget, projected that inflation is expected to fall to 16.5 percent in 2015, compared to 23.8 percent in 2014.

But with latest NSO figures showing a rise in May inflation, government’s projection seems to be tall order, largely due to the increase in food inflation occasioned by a deficit in maize, due to floods and dry spell that hit the country this year.

Maize, as part of food, has a huge weight at 50.2 percent in the consumer price index (CPI) that measures changes in the price level of a market basket of consumer goods and services purchased by households.

University of Malawi’s Chancellor College economics professor Ben Kaluwa yesterday said possibility of the country achieving the 16.5 percent inflation rate this year is doubtful.

“Price of fuel continues to rise and so is the price of maize on the market.  It is a well- known fact that inflation in Malawi is largely determined by reduction or increase in food products,” he said.