Malawi inflation rate drops to 19.7%

Malawi year-on-year headline inflation for February 2015 as measured by the consumer price index (CPI) eased 1.5 percentage points to 19.7 percent buoyed by the drop in food and non-food prices, the National Statistical Office (NSO) has said.

In the same period last year, inflation rate was at 24.6 percent, which means that this year’s prices of goods and services are a bit softer than last year.

Analysts have predicted that if the trend continues, the Reserve Bank of Malawi (RBM) could meet its inflation rate target of 15 percent by June 2015 largely due to the appreciation of the kwacha and reduction in fuel prices, which have been reduced twice this year.

In the monthly Stats Flash, NSO said: “Overall, food inflation stands at 19 percent from 21.5 percent in January 2015. Although food prices have gone up, the rate of increase is much lower than the corresponding rate in the same period last year.”

The Zomba-based statistical body said the decrease in non-food inflation to 19 percent from 20.89 percent is still emanating largely from the effects of decline in fuel prices.

NSO has said urban and rural inflation rates stand at 22.5 percent and 19 percent, respectively, decreasing from 24.5 percent and 20.6 percent.

University of Malawi’s Chancellor College economics professor Ben Kaluwa said since the country is heading towards the harvest period, inflation rate is expected to fall further.

Malawi’s inflation is largely influenced by the availability of food, particularly maize because it has a huge weight at 50.2 percent in the CPI.

Earlier, Consumers Association of Malawi (Cama) executive director John Kapito said regardless of the positive developments such as inflation and fuel price drop, some traders have been raising their prices instead of reducing them.