Malawi’s year-on-year inflation for January eased by 0.9 percentage points to 7.9 percent, thanks to the easing prices of non-food items, published figures from the National Statistical Office (NSO) showed yesterday.
During the same period last year, inflation stood at 7.8 percent.
During the month under review, food and non-food inflation eased to 10.8 and 5.4 percent respectively from 10.7 and 7.1 percent the prior month.
Maize prices, on the other hand, have been skyrocketing to an average of K12 500 per 50 kilogrammes bag.
Lately, consumers have been complaining of high prices of goods and services despite inflation slowing down. The country’s inflation as measured by the Consumer Price Index (CPI) hit single digit of 9.3 percent in August, the first time in more than six years.
Maize, as part of the food component, traditionally impacts the country’s economy given that it constitutes 45.2 percent in theCPI, which is an aggregate basket of goods and services for computing inflation.
However, hopes for a bumper harvest as projected in the first-round of crop estimates hang by a thread after last week’s floods in 14 of the country’s 28 districts.
Interviews with four affected agricultural development divisions (ADDs) of Shire Valley, Blantyre, Machinga and Salima yesterday revealed that crops, particularly the staple grain maize, have either been washed away or been buried in the mud.
Reserve Bank of Malawi (RBM) baseline quarterly projection model shifted inflation forecast downwards to an average of 8.5 percent in 2019 from an earlier projection of 10.1 percent.
RBM Governor Dalitso Kabambe said in the first Monetary Policy Committee Statement though inflation expectations remain relatively high, they are likely to moderate on account of favourable prospects for macroeconomic outturn and favourable weather conditions experienced so far which point to higher agricultural output.
The International Monetary Fund (IMF) earlier said it would be crucial to bring down non-food inflation during the next 6-12 months for the current disinflation trend to get entrenched.
Since 2016, the exchange rate has been stable. Along with this, inflation rate has also eased to single digit.
Maize is by far the most dominant crop grown by almost every farmer in Malawi and account for about 50 percent of the entire planted area, according to the Ministry of Agriculture, Irrigation and Water Development.