Majority of Malawians continue to struggle in accessing basic commodities following reduced purchasing power necessitated by elevated rural inflation.
With the high cost of living in rural areas at about K140 000 per month for an average family of six and an income of below the current K35 000 minimum wage, concerns are rising of the fate of the 84 percent of the population as they struggle to cope with a small income.
Business analysis shows that since the beginning of the second half (July 2020), headline inflation has declined by 100 basis points to 7.5 percent in October.
On the other hand, urban year-on-year inflation has declined by 130 basis points to four percent in October while rural year-on-year inflation has declined by 100 basis points to 10.2 percent.
However, at 10.2 percent, this is 270 basis points above the national headline inflation of 7.5 percent for October.
In an interview on Monday, National Statistical Office (NSO) spokesperson Kingsley Manda observed that unlike in urban areas where the price change in shops is not volatile, most areas in the rural communities have open markets prone to price volatility.
He also indicates that unlike the urban basket, the rural basket has fewer items that are priced for each index category.
“As such, any price change for each commodity has more impact in the rural than in urban,” said Manda.
However, economic statistician Alick Nyasulu observed on Tuesday that with the country’s inflation being mainly food based, the rise points to emerging food shortages in rural areas, which he said is often seasonal.
He pointed out that most households will continue struggling to have proper meals as they sold their produce soon after harvest.
Said Nyasulu: “Naturally, this is a concern for food security and there might be incidents of malnutrition mainly with children that may lead to diseases and general degradation in welfare.
“In such situations people often tend to look for casual farming jobs at the expense of working in own gardens-which may worsen the harvest next season even with good rains.”
Reserve Bank of Malawi (RBM) figures show that during the second quarter (July to September), inflation continued to decline and averaged 7.6 percent from 8.9 percent in the second quarter (April to June).
The decline, according to RBM, is a reflection of joint effects of bumper maize harvest during the 2019/20 agricultural season; suppressed prices due to the Covid-19-induced weak demand for maize; and basal effects from high food prices in 2019.
Subsequently, the projected annual average headline inflation for 2020 was also lowered to 8.6 percent from 9.8 percent projected during the Third 2020 MPC forecasting round. Inflation is projected to decline further in 2021.
Centre for Social Concern economic governance programmes officer Banard Mphepo said more Malawians in rural areas, estimated at 84 percent of the population, will be wallowing in abject poverty as most of them will be forced to sell their assets such as goats and chickens to survive.
Consumer rights activist John Kapito said elevated rural inflation only makes life harder for rural communities as it also worsens their welfare.
He said: “This explains the serious continuous abject poverty faced by most rural communities.
“This is also a reflection of total mismanagement of various policies and programmes aimed at adressing matters of abject poverty.”