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Inflation rate for October slightly falls to 23.3%

Malawi’s year-on-year inflation rate for October 2014 has slightly fallen by 0.4 percentage points to 23.3 percent from 23.7 percent the month before. The National Statistical Office (NSO) has attributed the drop to a decline in costs of cereals and cereal products.

This is the second month in a row for the rate of inflation—the monster that wipes out people’s disposable income—to fall. This means that prices in the two months have continued to rise, but at a decreasing rate.

inflationThe NSO’s Stats Flash shows that urban inflation rate increased to 31 percent, a 0.9 percentage points jump from 30.9 percent while rural inflation decreased to 19.1 percent from 19.8 percent.

“Non-food inflation increased to 25.6 percent from 25.4 percent and food inflation decreased to 21.5 percent from 22.7 percent,” said the NSO statement.

Analyst have, however, said when inflation figures for November are released, they could show a marked increase largely due to the hike by 6.7 percent in prices of fuel by the Malawi Energy Regulatory Authority (Mera) on November 7 and a depreciating kwacha.

Mera attributed the hike to the continued depreciation of the kwacha despite a 13 percent drop in the global fuel prices, currently at $77.52 per barrel.

Reserve Bank of Malawi (RBM) has forecast that inflation will accelerate to 25.4 percent in December 2014, largely due to rising food prices and the depreciating kwacha.

“Thereafter, inflation is expected to begin decelerating in March [2015] as a result of the expected seasonal appreciation of the kwacha and improvements in the food supply situation,” said the RBM in the minutes of the Fifth monetary policy committee (MPC) meeting at the end of October.

Malawi’s inflation rise is largely triggered by the increase in the prices of food, which has a bigger weight in the consumer price index (CPI).

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