Malawi’s year-on-year inflation has continued its upward surge, hitting 37.9 percent in February, a 2.8 percentage point increase from 35.1 percent in January.
The National Statistical Office (NSO) has attributed the overall rise in inflation to the recent adjustment in prices of maize and maize flour and the adjustment in the price of fuel, putting the urban and rural rates at 39.6 percent and 33.7 percent respectively.
Maize prices have been on the rise over the past months with a kilogramme (kg) now selling at as high as K200 (about $0.51).
The staple grain, as part of food, accounts for 50.2 percent in the Consumer Price Index (CPI)—a measure that examines the weighted average prices of consumer goods and services.
Early March, the Malawi Energy Regulatory Authority (Mera) hiked the price of fuel by an average 2.2 percent, and following the raise, petrol is now selling at K714.90 (about $1.78) per litre, a 1.5 percent increase from K704.30 (about $1.76) per litre; diesel has gone up by 1.49 percent to K693.80 (about $1.73) per litre from K683.60 (about $1.70) per litre. Paraffin for industrial use jumped the highest by 3.8 percent to K613.90 (about $1.53) per litre from K591.40 (about $1.47) per litre.
The rise in inflation will likely put pressure on monetary authorities to raise the bank rate—the rate at which commercial banks borrow from the central—maintained at 25 percent during the last Monetary Policy Committee (MPC) meeting.
Already, the banks have started raising their lending rates, with Standard Bank putting its rate at 40 percent from 35 percent.
The MPC is expected to meet on April 11, and only then will the direction of the bank rate be known, but analysts on Saturday said the RBM will likely raise the rate to maintain inflation expectations.
The rise in inflation is a blow below the belt for most consumers because this will see their purchasing power dwindling considerably with savings drastically reduced.
Consumers Association of Malawi (Cama) executive director John Kapito said the rise in inflation means more misery for Malawians.
“Price of goods have continued to rise unabated and there is hope in sight that the state of affairs will turn the corner any time soon,” he said.
Malawi’s inflation is mainly driven by food, and experts expect the rate to moderate in the near future as people start eating from their harvest this month.
Analysts expect the continued weakening of the kwacha to heighten pressure on inflation this year, eroding people’s purchasing power.