By Chimwemwe Mangazi & William Kumwembe:
Consumers continue to spend more on basic needs despite the inflation rate remaining on a downward spiral in the recent past.
Malawi’s headline inflation, as measured by the Consumer Price Index (CPI), went down in April 2019 to 9.1 percent from 9.3 percent registered in March, according to figures from the National Statistical Office (NSO).
NSO figures released on Thursday show that food inflation went down to 13.8 percent from 14.4 percent in March while non food Inflation stood at 5.4 percent from five percent.
But latest figures from the Centre for Social Concern (CfSC) show that, cumulatively, the cost of food increased by 12 percent between January 2018 and April 2019.
Cost of non-food items went up by 9 percent during the period under review.
This resulted in a 10 percent rise in the overall cost of living over the 15-month period.
A CfSC statement indicates that average levels of income for most Malawians fall below half of their living requirements as they earned less than K100,000 per month.
“At the moment, government can contemplate other possible ways of distributive and progressive tax justice such as raising the non-taxable bracket from the current K35,000 to meet the food poverty line pegged at an average of K106,000 such that low income earners can have money to cater for the basic food items,” reads the statement in part.
It recommends that the government reduce or remove Value Added Tax (VAT) on some basic essentials such as water, electricity, bread, and cost of communication, especially airtime.
In an interview, CfSC Economic Governance Programs Officer, Lucky Mfungwe, said agro based policies should be implemented vigorously to cushion Malawians.
“The government only sets minimum prices without playing its regulatory role through Agricultural Development and Marketing Corporation.
“In our recent study, results show that the farm gate price of maize is hovering within the ranges of K60 to K80 per kilogramme despite the government setting minimum price at K10per kilogramme,” Mfungwe said.
Last month, rising maize prices pushed up the inflation rate by 1.4 percentage points to 9.3 percent from 7.9 percent the previous month.
Commentators attributed the rise to seasonal trends in the price of the staple grain.
The government’s second round crop estimates showed that recent floods that hit some parts of the country did not have huge impact on maize output, with the country expected to have a surplus of 355, 000 metric tonnes.
Maize impacts the country’s economy given that it constitutes 45.2 percent of the (CPI), which is an aggregate basket of goods and services for computing inflation.