Malawi’s year-on-year inflation eased by 0.4 percentage points to 9.4 percent in April, published figures from the National Statistical Office (NSO) showed yesterday.
In its April 2020 Consumer Price Index (CPI)—an aggregate basket of goods and services for computing inflation—NSO said both food and non-food inflation declined by 0.1 percentage points from the previous month to stand at 14.6 and five percent, respectively.
As compared to the same period last year, inflation was recorded at 9.1 percent.
The country’s headline inflation has been on the downward spiral since December 2019, thanks to continued declining maize prices.
Maize, as part of the food component, impacts the country’s economy given that it constitutes 45.2 percent of the CPI.
For instance, the country’s staple grain’s production is projected to increase by 8.8 percent from 3 391 924 metric tonnes (MT) in 2018/19 growing season to 3 691 866 MT in the 2019/20 growing season due to favourable weather conditions and an increased uptake of inputs by farmers.
In its April Monthly Economic Report, Alliance Capital Limited said looking forward, the trajectory in inflation in the near-term is likely to be driven by the pace of reversal of food prices and the slowdown in momentum of some of the non-food components of inflation, especially transport.
“The sharp reduction of international crude oil prices, if sustained, could improve the country’s inflation outlook even further,” reads the report in part.
Barely a month after effecting another downward revision, the Malawi Energy Regulatory Authority (Mera) a fortnight ago reduced fuel pump prices influenced by the impact of the novel coronavirus (Covid-19) pandemic which has affected the prices of fuel globally.
Following the latest revision, petrol is now selling at K690.50 per litre from K780 per litre while diesel is at K664.80 per litre from K765 per litre and paraffin is selling at K441 per litre from K625/litre.
Maize, on the other hand, has declined to an average of K9 000 from K20 000 per 50 kilogramme bag during the lean period.
Reserve Bank of Malawi Governor Dalitso Kabambe recently said the central bank is still hoping to attain a five percent inflation target by the first quarter of 2021 despite uncertainty caused by the Covid-19 pandemic.
He said although the central bank would have loved inflation to remain in single digit, it will all depend on maize prices.
Kabambe, however, said the potential negative impacts of Covid-19 have come at a time when the country is enjoying macro-economic stability characterised by low inflation and interest rates, a stable exchange rate and high accumulation of a foreign exchange currency buffer. n