Inflation rate has averaged 9.2 percent between January and November 2019, a rate which is 0.3 percentage points below the projected inflation rate by the Reserve Bank of Malawi, our calculations show.
In January, inflation rate averaged 8.8 percent only to shoot to 10.4 percent in November this year.
In its recent economic review, Nico Asset Managers said although the average inflation rate is slightly below the targeted rate, there is growing inflationary pressure on the market following continued increase in maize prices.
In its Monetary Policy Statement, the central bank projected inflation to average nine percent in 2019 and to gradually decline to five percent in 2021, largely due to expected favourable weather pattern.
The statement acknowledges that rising food prices may slightly push up inflation rate in the fourth quarter, leading to a marginally higher outcome than projected.
University of Malawi’s Chancellor College economics professor Ben Kaluwa in an interview yesterday said the inflation outcome is reflective ofa number of factors in the economy such as food prices and foreign exchange rate.
He said: “Projections are just projections and these may be subjected to other exogenous factors. Malawi is an agro-based economy, therefore, inflation is driven by food prices and exchange rate and when all factors are controlled, inflation is moderated.
“We are seeing signs of good agriculture season coupled with good rains, which will result into good crop which will help to moderate inflation in coming months.”
Reserve Bank of Malawi spokesperson Mbane Ngwira could not be reached for a fresh comment yesterday, but last week said the central bank is not shaken with the slight inflation movement to double digit, saying though inflation rate may rise slowly, they would still beat their target.
“We project average inflation for 2019 to still be in single digit. This is premised on the fact that during these months, private traders will be offering their stock of maize for sale in market, so too Admarc,” he said.
In November, headline inflation rate inched up by 0.8 percentage points to 10.4 percent as food prices continued to rise, a development the central bank said is still manageable.
Published figures from National Statistical Office (NSO) show that food inflation stood at 17.2 percent in November while non-food inflation was seen at 5.5 percent in the review month.
Prices of maize, the country’s staple grain, have been on an upward spiral in the past months, with a kilogramme (kg) selling at K360, translating to K18 000 per 50 kg bag in some parts of the country. Maize, as part of the food component, impacts the country’s economy given that it constitutes 45.2 percent of the Consumer Price Index (CPI), which is an aggregate basket of goods and services for computing inflation.