Inflation rate slightly drops to 25.8 percent

Malawi’s year-on-year headline inflation for November 2022 slowed by 0.9 percentage points to 25.8 percent from 26.7 percent in October, data from National Statistical Office (NSO) shows.

During the month under review, food inflation rate eased to 33.4 percent from 34.5 percent in October while non-food inflation rate dropped to 17.7 percent from 18.6 percent in October.

This means prices of food items as well as non-food items increased at a reduced rate.

Speaking in an interview yesterday, Consumers Association of Malawi executive director John Kapito said pressure on the value of money and rising maize prices paint a gloomy outlook for consumers

He said: “The real effect of this marginal reduction always takes time to be felt by consumers and in the case of Malawi which is economically unstable, these are never realistic and passed on to consumers.

“Otherwise we continue to experience elevated prices for basic commodities.”

The country’s annual rate of inflation has been rising steadily over the last 10 months largely driven by increasing prices of goods and services.

This upward trajectory of both food and non-food inflation compelled the central bank to tighten monetary policy by increaseing the policy rate, the rate at which commercial banks borrow from the central bank, to 18 percent to tame the rising inflation rate.

The decision was meant to reduce money supply in the economy by increasing the cost of borrowing to tame inflation.

Over the past 10 months to October 2022, Malawi’s inflation rate has averaged 20 percent.

In the period, prices of food have been on the rise with retail maize prices increasing by five percent to average K412 per kilogramme in October.

Maize, as part of the food component, contributes about 53.7 percent in the Consumer Price Index, a measure of price changes in a basket of constant quantity and quality of goods and service NSO uses to compute inflation.

Meanwhile, the Reserve Bank of Malawi has projected the 2022 annual average inflation at 21.5 percent from 9.3 percent registered in 2021.

In 2023, the RBM is projecting headline inflation rate to stand at an average of 21.8 percent.