A reduction in maize prices and abundance of food has failed to offer relief to consumers during the novel coronavirus (Covid-19) pandemic, the Centre for Social Concern (CfSC) has said.
CfSC April 2020 Basic Needs Basket Assessment indicates that a slowdown in the movement of goods has fuelled an increase in the prices of essential commodities, especially food, due to limited supply.
The assessment shows that while maize prices decreased from K17 500 in March to K9 500 in April, a family of six needed K211 000 to afford basic needs compared to K180 000 during the same period last year while the same family needed K134 670 between December 2019 and March 2020 for food purchases alone out of the entire cost in the basic needs basket budget.
CfSC economic governance programme officer Bernard Mphepo said this is pushing more Malawians into the poverty bracket of living below $1.90 (about K1 406) per day.
He said: “Government’s intervention on cost of living is, therefore, critical at this time to cushion vulnerable communities.
“The government needs to be absolutely transparent, accountable and responsive so the poorest of the poor can also benefit from government or donor funds.”
Mphepo noted that the recent reduction in fuel prices without a responding decrease in cost of essential commodities is increasing income inequality between the rich and the poor.
To push down the cost of living, the study recommends increasing the tax-free band and minimum wage to K100 000 and the removal of value added tax on basic essential goods such as water and electricity.
Ministry of Labour, Skills and Innovation commissioner of labour Hlale Nyangulu recently warned that a significant increase in the minimum wage could lead to massive retrenchments as the economy remains small to support such adjustments.
“Sometimes if we set a minimum wage much higher, the employer is unable to sustain that wage, obviously that employer will resort to retrenchment, resulting in a lot of workers losing their jobs,” he said.
Cempetition and Fair Trading Commission (CFTC) executive director James Kaphale in an interview on Thursday urged passenger transport operators to comply with the reduced fuel prices by reducing fares to benefit consumers.
But Consumers Association of Malawi executive director John Kapito said reduced prices of fuel, including tax waivers on products only benefit traders who make profits at the expense of consumers.