Inflation surges to 26.7 percent

By The Daily Times Last updated Mar 21, 2023

Malawi’ s headline inflation— the rate at which commodity prices change at a given period in an economy— maintained an upward trajectory in February 2023, reaching 26.7 percent, figures from the National Statistical Office show. In its February 2023 inflation update released on Friday, NSO attributes the rise in month-on-month headline inflation to a rise in…

This is a 0.8 percentage point increase from 25.9 percent registered in the previous month when the inflationary trajectory took a new twist, having eased, albeit marginally, in December 2022 to 25.8 percent.

In its February 2023 inflation update released on Friday, NSO attributes the rise in month-on-month headline inflation to a rise in food inflation by a 1.2 percentage point to 31.7 percent from 30.5 percent in January.

On the other hand, the non-food inflation rate declined by 4.9 percentage points, from 25.4 percent in January to 20.5 percent in February.

But in its recent Monetary Policy Committee report, the Reserve Bank of Malawi said it expects the average headline inflation to slow down to 18.2 percent this year from 21 percent recorded in 2021.

RBM anticipates subdued imported inflationary pressures on account of declining fuel and non-fuel global commodity prices.

However, the central bank remained cautious, saying the outlook remains mixed as an elevated inflation risk is still imminent due to structural challenges, among other things.

Economist Gilbert Kachamba recently said the trend would change as the country exits the lean season.

“We are moving towards stability as the increase is not that alarming. I hope, soon, food inflation will start falling. Nonetheless, the inflation rate is still high,” Kachamba said.

The Economics Intelligence Unit projects a year-on-year inflation rate of 13 percent while the International Monetary Fund sees inflation averaging 16.5 percent this year.

However, the inflation outlook is now murky in the aftermath of Cyclone Freddy, which affected most districts in the Southern Region, bringing about devastating effects on almost all sectors of the economy.

While Malawi was still nursing bruises from last year’s Cyclone Ana, coupled with exogenous shocks emanating from the Covid pandemic, Cyclone Freddy, which landed into the country last weekend, has hit the economy hard.

The already volatile power supply has been intermittent while most roads turned impassable, putting gains the country was recording in the past months in tatters.

The disaster has also disrupted water supply and telecommunication services. Crops and livestock were also washed away in some parts of the ten affected districts.