Welfare losses emanating from rising prices of goods and services since December 2020 are more pronounced in the rural areas, a Business News analysis has shown.
Published National Statistical Office (NSO) figures indicate that while year-on-year, rural inflation has increased by 0.6 percentage points from 10.2 percent in December 2020 to 10.8 percent in July 2021, rural food and non-food year-on-year inflation has moved from12.9 percent and 6.5 percent to 11.9 percent and 9.4 percent.
On the other hand, urban inflation rate has risen by 1.7 percentage points from 4.3 percent in December 2020 to six percent in July 2021 with food and non-food year-on-year inflation rates moving up from 5.6 percent and 3.5 percent to 7.4 percent and 5.2 percent, respectively.
This means that during the review period, while food inflation declined by 100 basis points in the rural areas, it increased by 180 basis points in the urban areas.
Comparatively, non-food prices rose by 290 basis points and 170 basis points in the rural and urban areas, respectively.
In an interview on Tuesday, Lucy Nangoma, a maid working in Blantyre but originally from Chiradzulu, said it has become difficult to support her family in the village considering the continued rise of prices.
She said: “I earn an average salary of K40 000 from which I have to send my mother K30 000 to support my two daughter and herself. But now when I send the money, she always complains because the prices for almost everything in the village except for maize, has increased.”
Speaking separately, Consumers Association of Malawi executive director John Kapito observed that looking at the inflation rates in the country, one would see that the most affected consumers by high cost of living are those in rural areas.
“The only people that feel the high impacts of inflation are the consumers themselves and these figures are not a true reflection of what is happening on the market.”
The increase also follows two fuel price increases effected by the Malawi Energy Regulatory Authority (Mera) averaging 28 percent on December 16 2020 and 11 percent on March 9 2021 and a 10.62 percent hike in electricity tariffs two weeks after the second fuel hike.
Effectively, petrol and diesel prices have moved from K834.60 and K826.40 per litre to the current K899.20 per litre and K898 per litre, respectively.
Electricity, on the other hand, has moved from K94.43 per kilowatt hour (Kwh) to the present K104.46 per Kwh.
Economist Bond Mtembezeka observed that thhe kwacha depreciation and fuel price rises have all put upward pressure on both rural and urban inflation over the last half of the year but that bumper yields have cushioned consumers in the rural areas, hence; rural food inflation has moved down by 100 basis points to 11.9 percent
Economics Association of Malawi executive director Frank Chikuta observed that prices in rural areas are more volatile because the rural basket is not as diversified as the urban basket hence more prone to seasonal patterns and shocks.