Malawiâ€™s year-on-year inflation rate for June jumped by 2.8 percentage points to 20.1 percent from 17.3 percent the month before, the National Statistical Office (NSO) said on Wednesday.
In its Stats Flash, the NSO said core inflationâ€”a measure of inflation which excludes certain items that face volatile price movements such as food and energyâ€”has gone up by 0.9 percentage points to 22.9 percent largely due to â€œlagged effects of the recent price hikes in non-food costsâ€.
This is the sixth month in which inflation has been in the double digit territory since January this year, the first time in three years.
The June inflation rate rise has come at a time when Malawians have started feeling the effects of the 49 percent devaluation of the kwacha by the Reserve Bank of Malawi (RBM), an average 63.3 percent rise in electricity tariffs and recently a five percentage points increase in bank rate to 21 percent from 16 percent, the second since May.
The rise in inflation will put pressure on monetary authorities on the direction of the bank rateâ€”the rate at which commercial banks borrow from the central bankâ€”since they introduced inflation targetting in April this year.
Finance Minister Dr. Ken Lipenga has forecast an inflation rate of 18.4 percent in 2012 with prospects of decelerating to 16.1 percent in 2013 as Malawiâ€™s economic full recovery begins. This is against the earlier projected six percent.
The rise in inflation rate is also coming at a time Malawiâ€™s economic growth in 2012 is expected to slow down to 4.3 percent because of weaker agricultural performance, intermittent power supply and low levels of reserves, at below one month of import cover now, that affected key imports such as fuel and raw materials, according to Lipenga.
Malawiâ€™s inflation is mainly driven by food which accounts for 58.1 percent of the Consumer Price Index (CPI)â€”a measure that examines the weighted average of prices of a basket of consumer goods and services.