Malawi’s producer prices rose by 37.6 percent in the first quarter (Q1) of 2025 driven by soaring food processing cost and inflation, new data from the National Statistical Office (NSO) show.
Economists say the sharp rise raises concerns about renewed inflationary pressures and the resilience of local producers, particularly small and medium enterprises.
The report shows that Malawi has recorded a sharp increase in producer prices, with the year-on-year average growth rate for Q1 standing at 37.6 percent, a rise from 26.7 percent recorded between the fourth quarters of 2023 and 2024.
The Producer Price Index (PPI), which measures changes in the prices of goods as they leave the producer, reveals that inflationary pressures at the production level remain persistent. Between the Q4 of 2024 and Q1 of 2025 alone, producer prices rose by an average of 19 percent, according to the NSO report.
Reads the report in part: “The primary cause of both the year-on-year and quarter-on-quarter increase in producer prices is the rise in prices for manufactured food products such as cooking oil, bakery and grain mill products.”
The report further indicates that among the manufacturing sectors, producer prices for plastic products experienced the highest increase over the period.
In a written response on Saturday, Malawi Confederation of Chambers of Commerce and Industry director of industries and business environment Lucky Mfungwe said the 37.6 percent year-on-year rise in Malawi’s PPI, largely driven by surging manufacturing costs in food and plastic products, has placed significant strain on local businesses.
He said: “For manufacturers, especially small and medium enterprises, this has translated into narrowed profit margins, increased operational costs and cash flow challenges.
“Key inputs such as raw materials, packaging, energy and transport have become more expensive and for import-reliant sectors, the continued depreciation of the kwacha has magnified cost pressures.”
Mfungwe said some firms are scaling down production, delaying investment or downsizing staff to cope with the economic environment.
“Ultimately, high producer prices erode business confidence and discourage long-term planning, which could stall industrial growth,” he said.
He said: “Food processors are, where possible, using locally available ingredients, reducing packaging sizes to maintain affordability, while plastics manufacturers are shifting toward recycled materials and lighter product designs.”
University of Malawi associate professor of economics Gowokani Chijere Chirwa, in a written response, attributed the PPI surge partly to improved agricultural output, especially maize, which saw a production increase of 9.2 percent in the 2024/25 season.
“We cannot deny the fact that production has largely been driven by agricultural output. Other crops have also performed well,” he said.
On the potential impact of rising producer prices on consumer inflation and the cost of living, Chirwa was optimistic, adding that while producer prices are up, there are signs that inflation is easing.
Apart from the data and expert commentary, ordinary people are already grappling with the effects of rising production costs.
Moses Chiwendo a mini-shop owner at Luwanda Market in Machinjiri Township in Blantyre, said the prices of manufactured goods have risen sharply, affecting their sales.
Manufacturers Association of Malawi chairperson Gloria Zimba is quoted as having said that a slight improvement in power supply and a complete reopening from Covid-19 pandemic restrictions has improved industrial output.
