Commodity prices jump 137% in 9 months —Cama

The Consumers Association of Malawi (Cama) has said commodity prices have jumped at an average rate of 137 percent in nine months since the devaluation of the kwacha and its subsequent floatation.

“We are worried because most of the people now can no longer afford the very basic things such as soap, sugar, cooking oil and maize flour, among other things. Our argument has always been what is the motive of floating the kwacha? Who does the government want to punish?”queried Cama executive director John Kapito, in an e-mail reply to Business News questions.

He has faulted the free floating of the kwacha, arguing that it has completely collapsed the country’s economy characterised by the ever rising cost of living.

Since the kwacha was devalued and floated, it has been depreciating against major trading currencies.

The devaluation and floatation of the local unit, as part of the wider economic reforms, were aimed at reinvigorating the economy and also to bring on track the International Monetary Fund (IMF) Extended Credit Facility (ECF) programme which went off track.

Kapito noted that as long as the kwacha is floated, workers will continue to strike, arguing that the worst strikes have not started as yet.

“One does not understand why the government cannot see that such economic reforms will never work in Malawi. The kwacha is sinking, and there is nothing to hold it and there will be nothing to stabilise it now and in the medium future,” he said.

Kapito said there is no miracle to economic prosperity, stressing that there is nothing the country’s leadership is doing to get Malawians out of the economic mess.

He warned that commodity prices will continue to escalate as long as government clings to the free floating regime of the kwacha.

Last year, RBM governor Charles Chuka warned that Malawians should expect a ‘bumpy road’ to recovery, arguing that fruits of the monetary policy decisions would be seen in this year when sales of tobacco which brings in about 60 percent of the country’s foreign exchange earnings.