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Home Business Business News

Inflation averages 12% in 11 months

by Happy Mwachande
21/12/2017
in Business News, Front Page
3 min read
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With November inflation easing to 7.7 percent, Malawi’s headline inflation rate in 11 months from January to November 2017 averaged 12 percent, according to Business Review calculation.  This is within the authorities’ annual target with one month to go before the end of 2017.

Treasury, the custodians of fiscal policy, projected that inflation would average 12.1 percent while the Reserve Bank of Malawi (RBM), custodians of the monetary policy, projected average inflation to be 12.3 percent or below in 2017.inflation | The Nation Online

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In an interview on Monday, Treasury spokesperson David Sado said the annual average rate will be within their 12.1 projection.

However, the International Monetary Fund (IMF), who projected consumer price would average 13 percent say they have been surprised by deceleration of inflation in the past few months.

“Inflation is now decelerating in a more immediate pace than we thought initially, but we forecast that inflation will hit single digit eventually but the timing is faster than we thought,” said IMF resident representative Jack Ree yesterday in reaction to our calculations.

Business News analysis shows that year-on-year headline inflation rate was 18.2 percent in January 2017, then dropped to 16.1 percent in February before slowing down to 15.8 percent in March.

According to National Statistical Office (NSO), inflation continued to drop in April as it eased by 1.2 percentage points to 14.6 percent before falling to 12.3 percent in May. It eased to 11.3 percent in June and declined by 1.1 percentage points in July to 10.3 as Malawi’s inflation edged closer to hitting single digit for the first time in more than six years.

In August, inflation eased to a single digit, 9.3 percent, beating RBM’s forecast that the rate of inflation would hit a single digit by December owing to easing food prices, particularly maize as the country produced a 30 percent plus surplus.

In September, October and November inflation eased to 8.4, 8.3 and 7.7 percent, respectively, raising the Treasury’s hope of maintaining a single digit inflation in 2018.

Sado said they expect the decline in inflation to be sustained in 2018 as they anticipate the micro-economic environment to continue stabilising.

“Food inflation has contributed a lot as projected following an increase in food crops production and we expect the decline trend of inflation to be sustained next year with expectations that the micro-economic environment will continue to be stable,” he said.

RBM, who beat their annual inflation target last year, in their October Economic Review released last week said inflation pressures continued its downward trajectory largely due to food inflation which continued to slow down in the months under review by 0.3 percentage points as non-food inflation slightly edged up to 11.7 percent from 11.6.

But in its recent economic brief, Nico Asset Managers see mounting food inflation pressure in the lean period due to the decrease in food availability as a result of the maize export ban lift.

In September this year, IMF said it would be crucial to bring down non-food inflation in the next six to 12 months for the current disinflation trend to get entrenched.

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