Development economist Dalitso Kabambe says without significant interventions to help low wage earners in the face of rising prices, the gap between the wealthy and the poor will continue to widen.
This, he said, could only intensify struggles of the average Malawian.
Commenting on the rising prices, Kabambe, who is UTM Party president and former Reserve Bank of Malawi Governor, observed that the economic challenges warrant interventions such as wage adjustments, government subsidies or efforts to stabilise the economy.
He said: “With the minimum wage, at K90 000, it means it is far below what is needed to cover basic expenses.
“Low-wage earners, particularly those working in subsistence agriculture, domestic work, and retail, find themselves increasingly unable to afford necessities like food, shelter, and healthcare. With costs rising across the board, many families have been forced into survival mode, making difficult decisions about what to prioritise.”
Kabambe said as the purchasing power of the Malawian kwacha erodes due to hyperinflation, many families are resorting to consuming unsafe or unregulated foods, such as chitedze, which are often toxic and unsafe for consumption.
“The economic situation also contributes to rising interest rates, making credit more expensive and harder to access. Businesses are struggling with increased operational costs, and job insecurity is becoming more common in the formal sector as companies face financial strain.
“For many, this means the ability to save, invest, or plan for a better future is rapidly slipping out of reach.”
Centre for Social Concern (CfSC) data shows that between December 2024 and January 2025, the cost of living increased by 12.9 percent from K615 138 to K694 653.
On the other hand, government had set K52 000 as minimum wage for domestic workers, up from K38 000 and K90 000 for those working in shops, up from K50 000.
In the current fiscal year, the zero-rated pay as you earn (Paye) bracket was increased from K100 000 to K150 000 amid piling pressure on the Ministry of Finance and Economic Affairs as consumers sought relief from a cost of living crisis that eroded their buying power.
Accordingly, the next K350 000 is taxed at 25 percent while the next K2 050 000 is taxed at 30 percent and K2 550 000 at 35 percent.
On Tuesday, CfSC said the absence of clear plans to adjust tax bands and set a national minimum wage in the proposed 2025/26 National Budget could have repercussions for vulnerable groups.
CfSC economic governance officer Agnes Nyirongo said for a nation that is already struggling with high inflation, skyrocketing food prices and an unemployment crisis, many Malawians will find themselves paying more than they can afford in taxes, while also facing stagnant wages that cannot keep up with the rising cost of living.
In his 2025/26 National Budget Statement, Minister of Finance and Economic Affairs Simplex Chithyola-Banda said government is implementing monetary policies that are complemented by fiscal measures to contain inflationary pressures.
