The Reserve Bank of Malawi (RBM) has justified the country’s high inflation rate compared to other member States of the Common Market for Eastern and Southern Region (Comesa), arguing it is due to different stages of liberalisation.
RBM spokesperson Mbane Ngwira, explaining why Malawi has one of the highest Comesa Harmonised Consumer Price Index (HCPI) which rose to 25 percent in January, said this is due to the fact that other economies in the region liberalised their exchange rates earlier.
“Although we have the second highest inflation in the region, it has to be noted that the other economies have also passed the same high inflation rates. With time, we will also enjoy lower inflation rates and the trend so far indicates that we are doing very well and will be at par with the other members,” said Ngwira.
According to the latest Comesa HCPI—a measure that compares inflation rates across some of the region’s members—prices in Malawi quickened by 25 percent in January compared to same period the previous year.
Out of the 16 members that are covered under the Comesa HCPI, in January 2014 Sudan recorded the highest year on year inflation rate of 38.2 percent whilst Mauritius recorded the lowest at 0.3 percent.
The average Comesa year-on-year inflation rate stood at 14.2 percent in January 2014, up from 11.5 percent registered in December 2013.
Malawi has been experiencing high inflation rates in the wake of the liberalisation—devaluation and flotation—of the exchange rate in May 2012.
The recent Monetary Policy Committee (MPC) meeting held in February noted that inflation was expected to peak—to reach a maximum—at 25.6 percent in February largely due to rising food prices and lagged impact of the kwacha after which it is expected to begin decelerating as a result of the expected seasonal appreciation of the kwacha and improvements in the food supply.