Rising commodity prices drive inflation to 13%
Malawi’s year-on-year headline inflation inched up by 0.9 percentage points to 13 percent in February largely a rise in food and non-food prices, figures from the National Statistical Office (NSO) showed on Tuesday.
During the month under review, food inflation rate rose to 15.3 percent while the non-food inflation rate closed at 10.1 percent.
This means prices of food items as well as non-food items increased at a higher rate in February compared to January when food prices rose by 14.2 percent while non-food prices rose by 9.6 percent.
In an interview, Consumers Association of Malawi (Cama) executive director John Kapito said the rising inflation is being felt by consumers as the cost of living continues to rise.
He said: “Many Malawians are currently experiencing challenges to access the very basic needs that a year ago were affordable. The rising inflation has also affected the lack of access to disposable incomes.
“All of a sudden, things have fallen apart as almost everything has gone up with no cushioning mechanisms for the ordinary consumer.
“The current economic situation is not sustainable and there is a need for market interventions by government because people are tired and hurt.”
In Malawi, maize, as part of the food component, accounts for about 45.2 percent of the consumer price index, which is an aggregate basket of goods and services for computing inflation.
Meanwhile, the Reserve Bank of Malawi (RBM) has indicated that the ongoing geo-political tension between Russia and Ukraine is a cause for concern, saying the higher-than-anticipated oil prices induced by the conflict could delay the convergence of inflation to medium-term targets in the country.
In its recent market intelligence report, RBM indicated that the development could compel central banks to implement less accommodative monetary policies that could jeopardise economic recovery plans.
The central bank said it will continue to monitor both domestic and global developments and take necessary action to mitigate any risks to the inflation outlook that are perceived to be permanent.
But at the first Monetary Policy Committee (MPC) meeting last month, RBM Governor Wilson Banda noted that although inflation pressures are mounting, the sources are considered transitory and likely to dissipate after the lean period.
He admitted that in the period ahead, pressures on inflation are likely to continue, mainly arising from a seasonal increase in prices of domestically produced food items and imported inflation.
The RBM, custodians of the country’s monetary policy, projected that headline inflation would average 10.4 percent in 2022, up from 8.9 percent projected during the fourth MPC meeting in November.
In his proposed 2022/23 National Budget Statement, Minister of Finance and Economic Affairs SostenGwengwe indicated that inflation would average 9.1 percent in the 2022/23 financial year.
