Inflation rises to 35% as pressures remain elevated

Malawi’s year-on-year inflation rate for January 2024 increased by 0.5 percentage points to 35 percent, the highest in 11 years, published National Statistical Office (NSO) figures show.

NSO data shows that the rise in inflation, a general increase in prices and fall in the purchasing value of money, was mainly due to rising food prices.

This has also coincided with the recent 44 percent devaluation of the kwacha.

“Food and non-food inflation rates are at 44.9 percent and 22.0 percent, respectively,” says NSO in the report.

During the prior month, food and non-food inflation rate stood at 43.5 percent and 22.8 percent, respectively, representing a 1.4 percentage increase and a 0.8 percentage points decline, respectively.

In an interview yesterday, Consumers Association of Malawi executive director John Kapito said the rising inflation continues to devastate and destabilise consumers’ disposable incomes.

“It is one of the worst economic crises in a country with no access to income and in an economy with the lowest economic growth where prospects for consumer welfare are almost impossible.

“Unfortunately, no one is able to explain for how long people can endure the economic suffering they are going through.”

On his part, economist Bond Mtembezeka said it is worrisome the rising food inflation “is quite worrisome as food is a basic need,” he said.

However, Scottish-based economist Velli Nyirongo observed that while individuals’ wallets are hit hard, making it harder to afford the basics, leading to deteriorating living standards, businesses might shy away from investing in growth or innovation because they’re not sure what the economic landscape will look like tomorrow.

He said: “That hesitation could put the brakes on economic growth and job creation.

“With inflation chewing away at the value of our currency, government is collecting less in taxes and might need to dip into their pockets even more for social programmes, straining the budget further.”

Meanwhile, the Reserve Bank of Malawi (RBM) has conceded that inflation outlook indicates elevated inflationary pressures, with the inflation path likely to be more than the 28.8 percent inflation outturn for 2023.

“Risks ahead are still strong: possibility of upward adjustment of electricity tariffs, high inflation expectations and El Nino,” said RBM in its First 2024 Monetary Policy Statement Forum presentation last week.

To moderate inflationary pressures, the central bank raised the policy rate by 200 basis points to 26 percent