Rising prices of goods and services hit consumers hard in 2022, with the cost of living—the level of prices relating to a range of everyday items—almost doubling, the Centre for Social Concern (CfSC) says.
Available figures show that while by December 2021, the cost of living for a household of six people was ranging between K250,000 and K300,000, by the end of December 2022 the cost of living rose to an average K450,000.
The Malawi economy has been susceptible to ‘imported’ inflationary pressure due to exogenous shocks while it was equally nursing the effects of structural economic challenges in the year.
While commodity prices remained elevated, other key economic indicators were in red evidenced by the volatility of the local unity, the Kwacha, against other major trading currencies and scarcity of forex.
In an interview, CfSC Programmes Coordinator responsible for Economic Governance Bernard Mphepo the rise in the cost of living in the year was on account of the rise in headline inflation which stems from an increase in prices of basic goods.
He said the 25 percent Kwacha devaluation in May 2022 and the increase in fuel prices pushed food inflation high, subjecting Malawians to high costs of living.
“This year, there should be deliberate policies to arrest rising inflation, especially food inflation. And since this depends on agricultural harvests, the government should make sure we have enough food. Otherwise, the cost of living may remain the same or continue rising,” Mphepo said.
Figures from the National Statistical Office show that, last year, headline inflation averaged 21 percent, which is 11.7 percentage points up from 9.3 percent recorded in 2021.
Economist Murry Siyasiya said Malawi should expect inflationary pressure to persist this year on the back of limited supply of goods and services, most of which are imported, against an elevated demand.
He added that the government should consider working towards addressing the prevailing demand-supply mismatches by increasing local production.
“Unfortunately, I do not see any active steps taken by the government and stakeholders in stimulating supply to deal away with the increasing inflation rate problem,” Siyasiya said.
Presenting the 2022-23 midyear budget statement in Parliament recently, Finance and Economic Affairs Minister Sosten Gwengwe admitted that the country lacks enough production capacity, which results in imported inflation.
He indicated that in 2023, headline inflation is projected to stabilise at an average of 21.8 percent before it starts to decline.
“Addressing supply constraints will help boost local production as a lasting solution to tame inflation,” he said.
Justin Mkweu is a fast growing reporter who currently works with Times Group on the business desk.
He is however flexible as he also writes about current affairs and national issues.