Mejn urges caution, as inflation eases
Malawi Economic Justice Network (Mejn) has urged consolidation for achievements made towards attaining macroeconomic stability including the easing of inflation by sealing all fiscal policy loopholes and monetary policy potential slippages.
Malawi inflation has continued its downward spiral with the February rate recorded at 16.1 percent, a 2.1 percentage points drop from 18.2 percent in January as food prices continue to drop.
But Mejn executive director Dalitso Kubalasa responding to the Economists Intelligence Unit (EIU) forecast of Malawi achieving single digit inflation early 2018 said there is need for government to exercise caution.
Minister of Finance, Economic Planning and Development Goodall Gondwe and the Catholic University head of economics department Gilbert Kachamba in separate interviews agreed with the EIU forecasts, although Gondwe said the single digit inflation might be achieved earlier than forecasted.
The recent drop in inflation is a reflection of the decrease in the price of maize which, as part of the food component, has a huge weight in the consumer price index (CPI) at 50.1 percent. CPI is a basket of commodities that measures the price level of consumer goods and services purchased by households.
So far, maize prices have continued to drop with a 50 kilogrammes (kg) bag now selling at between K8 000 and K9 500 in most markets.
However, Kubalasa said the positive trajectory feat after five years of inflation rates in excess of 21 percent should be viewed as a trigger for more collective action and positive energy with much caution as possible without losing sight of where the country is heading to.
Said Kubalasa “[We must] ensure we reign in on any challenges particularly the even more unpredictable non-food inflation.”
“Let us also ensure we do not get side-tracked by the obsession for the next general elections but rather remain objectively focusing on the bigger picture of continuing to lay a solid foundation for sustained and inclusive development for all, particularly the people who are the major assets for Malawi.”
Kubalasa said the country needs a proper balance of politics and economics as the country draws closer to 2019 by avoiding the risk of giving more weight to politics at the expense of consolidation of any positive gains no matter how small.
According to EIU inflation is expected to ease on the back of higher agricultural production.
Malawi last had a single digit inflation in December 2011.
