Consumers Association of Malawi (Cama) executive director John Kapito said on Tuesday consumers are feeling the pinch of rising food prices because the country has less money in circulation.
Due to this, he said traders are raising prices of goods to ensure that they are in business, a situation he says has reduced the buying power of most of the consumers.
“In as much as inflation rate is high, consumers are feeling the pinch of rising prices of goods because there is no money in circulation.
“As a result, the buying power of consumers has been reduced to the extent that some traders are opting out of business because they are not making sales,” he said.
According to Nico Asset Managers monthly economic brief for July 2016, inflation is expected to continue increasing in the short-term due to the decrease in availability of food crops during the post-harvest period and the depreciation of the kwacha.
Reads the report: “Inflation is expected to rise during the lean season which usually starts around October. The country has a maize deficit of about 493 000 metric tonnes which is exerting pressure on food prices.
“This pressure is expected to increase in August 2016 and beyond if sufficient maize will not be procured.
“The government has started procuring maize from other countries and is planning to implement large-scale irrigation projects to produce additional maize through irrigation.”
The Economist Intelligence Unit (EIU) expects Malawi’s inflation rate to average 23.5 percent in 2016, which is way above the target set by fiscal and monetary authorities.
This means prices of goods will continue to rise at an increasing rate and Malawians will continue to bear the brunt.
In its second Monetary Policy Committee (MPC) statement for 2016 released in May, Reserve Bank of Malawi (RBM) maintained the inflation rate target of 19.3 percent by June this year, which has been missed.
Malawi’s inflation rate is one of the highest in the 19-member Common Market for East and Central Africa (Comesa) under Harmonised Consumer Price Index (HCPI).
This means prices of goods and services in Malawi continue to increase at an increasing rate. n