Consumers will now pay 22 percent more for a packet of sugar following yesterday’s price hike by Illovo Sugar (Malawi) plc which cited the weakening of the kwacha and rising production costs as contributing factors.
Catholic University of Malawi economics lecturer Hopkins Kawaye and Consumers Association of Malawi executive director John Kapito said yesterday consumers should brace a price rise in commodity as the real effects of the poor economic environment is now being felt.
In a statement, the Malawi Stock Exchange-listed Illovo Malawi indicated that with the new price structure, one kilogramme (kg) of brown sugar will be selling at K1 110 from K900 per kg.
Consumers will now be paying K1 155 from K930 for one kg of white sugar while a bale of Dark Demerera, consisting 20 packets of sugar weighing one kg each, will now be selling at K18 560.09.
In an interview yesterday, Illovo Sugar (Malawi) plc managing director Lekani Katandula justified the price hike, saying it is a reflection of the escalating input costs incurred by the company.
He said: “Prices of commodities and other inputs such as fertiliser, transport and electricity which are core in our business have gone up significantly. We heavily rely on trucks to ferry sugar from one point to another, which requires a lot of diesel for that exercise.
“When you look at the domestic market, you will see that fuel prices have significantly gone up since the last time we hiked our product. On the other hand, the kwacha which has continued to weaken, has also exerted pressure on our production costs.”
While describing the development as unfortunate, Kapito said the increase was unavoidable given the prevailing economic environment characterised by rising cost of living.
He said: “For the past two years, sugar only went up eight percent despite the fact that there has been a general increase in cost of production.
“There is no way they could have maintained the prices given the rising cost of production.”
Kapito said price increases are expected as the kwacha was devalued last Friday by 25 percent and “we cannot fault Illovo because we know and appreciate that they are a business and their production costs and output should reflect the current economic environment”.
Illovo Sugar (Malawi) plc last adjusted prices of sugar by five percent in November last year on account of inflationary pressures.
Lately, Malawi has seen a rise in commodity prices due to, among others, the weakening kwacha and the Russia-Ukraine war.
The developments have in turn exerted pressure on domestic prices, which have risen sharply since last year.
The Reserve Bank of Malawi devalued the kwacha by 25 percent last Friday, which practically means a raise in the exchange rate, resulting in buying foreign currency at a higher price.
Kawaye said consumers should expect commodity price increases due to the weakened kwacha.
He said: “As a net import of basic commodities as well as raw materials, price increases should be expected and should not come as a surprise.
“We should also expect increases in other commodities such as fuel. Malawians will have to adjust their lifestyle to suit the current environment.”
The National Statistical Office has revised upwards the country’s Consumer Price Index (CPI) basket where food contribution to the CPI has jumped to 53.7 percent from 45.2 percent, following changes in household consumption pattern.