Cost of production remains relatively higher in Malawi than in peer countries, a situation commentators say is partly leading to high commodity prices.
For instance, the Producer Price Index (PPI)—an average change over time in the prices domestic producers receive for their output—increased by 4.8 percentage points to 29 percent in May from 24.2 percent in the same month last year.
This is contained in a Producer Price Brief Release the National Statistical Office (NSO) published on Wednesday.
During the period under review, the country’s manufacturing sector registered a year-on-year producer price growth rate of 26.5 percent, compared to 59 percent for utilities.
The development means that businesses in Malawi are facing escalating costs for goods and services they produce.
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In an interview yesterday, Economics Association of Malawi (Ecama) President Bertha Chikadza said the figures translate to rising production costs and inflationary pressures in the economy.
“The rising costs are potentially leading to higher inflation, reduced purchasing power, and decreased competitiveness of Malawian goods both domestically and internationally as consumers opt for competitors’ goods,” Chikadza said.
She added that there is a need for the private sector to engage with the government for supportive policies such as incentives for energy efficiency that may help navigate rising PPI challenges and maintain profitability, hence contributing to economic stability.
In a separate interview, economist Velli Nyirongo said the indicator has significant implications for Malawi’s economy.
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“If Malawi’s PPI increases faster than its trading partners, the country’s exports will become less competitive on international markets,” Nyirongo said.
He said the rising PPI is directly contributing to the rising inflation rate as producers pass on higher costs to consumers.
He said while it could stimulate economic growth if demand were strong, in Malawi’s case, low purchasing power is hindering demand, preventing a translation into economic growth.
Headline inflation inched up, albeit slightly, in August 2024 to 33.9 percent, while month-on-month it went up by 0.2 percentage points from 33.7 percent recorded in July
In its Consumer Price Index released on Monday, NSO highlights a rise in the food inflation rate to 42 percent in August 2024 from 41.9 percent in July.
In its Consumer Price Index released on Monday, NSO highlights a rise in the food inflation rate to 42 percent in August 2024 from 41.9 percent in July
Non-food inflation increased to 22.7 percent from 22.4 percent.
