Economics Association of Malawi (Ecama) says the elevated inflationary pressures are worsening poverty and negatively affecting production and business operations.
In an interview on Tuesday, Ecama executive director Frank Chikuta said the inflationary pressures have the potential to subdue economic growth.
His comments follows the rise in Malawi’s year-on-year headline inflation, which was recorded at 23.5 percent in June, a 4.4 percentage points from the previous month’s 19.1 percent pushed by rising commodity prices, according to National Statistical Office (NSO).
NSO figures show that both food and non-food inflation rose to 31.2 and 16.6 percent from the previous month’s 19.5 percent and 12.2 percent, respectively.
Said Chikuta: “In terms of the economic outlook, inflationary pressures are expected to remain elevated in the near-term and growth will be subdued.
“Many countries in the world are also facing the same challenges due to the effects of the Covid- 19 pandemic, the Russia- Ukraine war and climate change. These challenges have the potential of bringing economic collapse for those economies, including Malawi, which do not have adequate buffers to cushion against the shocks.”
In its June Global Economic Prospects Report, the World Bank said higher prices for farm inputs, such as seeds, fertilisers as well as fuel would therefore prolong food price pressures in Malawi and other sub-Sahara African countries.
Reads the report in part: “Costlier farm inputs could reduce productivity in Malawi and other countries further deepening food shortages.
“This ,coupled with higher fertiliser prices, could also worsen fiscal pressures given that in many countries, government spending on subsidised fertilisers accounts for a large portion of public spending on agriculture.”
In Malawi, maize, as part of the food component, accounts for about 53.7 percent of the consumer price index, an aggregate basket of goods and services used in computing inflation.
Last week, the Reserve Bank of Malawi (RBM) also said the recent kwacha devaluation and upward adjustment in domestic fuel prices may exert further pressures to the inflation outlook.
The central bank said this may require that monetary policy be recalibrated to contain further deviations of inflation away from the medium-term objective
RBM has since put 2022 inflation target at 12.3 percent from 10.4 percent last year.