Malawi’s annual headline inflation rate for 2018 was recorded at 9.2 percent, which is below the Reserve Bank of Malawi (RBM) projected target of 9.3 percent, published figures from the National Statistical Office have shown.
The inflation rate, as measured by the Consumer Price Index (CPI), shows that the December 2018 inflation rate declined to 9.9 percent from 10.1 percent recorded the previous month.
This means that fiscal and monetary authorities beat the inflation rate target in line with a forecast of attaining single digit inflation by the central bank.
Based on the annual average figures, it means that prices of goods and services in 2018 were a little bit softer than in 2017.
RBM spokesperson Mbane Ngwira said yesterday this has given the central bank more confidence that its target of five percent inflation by the first quarter 2021 may be achieved earlier than projected.
“The risks ahead are not of the magnitude that we faced in 2018. The main risk that we see is the performance of the agricultural sector. If the rains continue on a good note up to end February and the agricultural sector performance is quite good, then we may attain our objectives earlier than anticipated.
“Therefore, as the economy continues to stabilise, we expect economic aggregates such as interest rates to follow suit,” he said.
Meanwhile, agriculture experts see a glimmer of hope for subsistence farmers in most parts of the country as this year’s crop outlook is showing signs of a positive output despite hitches experienced at the onset of the growing season.
The promising crop outlook so far comes against the background of a reported 28.4 percent plunge in production last year, when the country produced 2 697 959 metric tonnes (MT) against the national consumption requirement of 3.1 million tonnes.
Maize, as part of food, constitutes 45.2 percent in the CPI, which measures changes in the price level of market basket of consumer goods and services. A bag of maize now costs an average of K10 000 per 50 kilogramme bag from an average of K5 000 in June 2018.
Inflation is a macroeconomic variable which together with interest rates and exchange rates give indication of stability of an economy. Economics Association of Malawi (Ecama) president Chikumbutso Kalilombe said yesterday after attaining the positive inflation results, the expectation is that this will now form the basis for the growth of economy and translate into improved livelihood of the people.