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Cost of living rises to 4.5%

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Local welfare monitoring body, Centre for Social Concern (CfSC), says the tariff hike that was recently effected by water boards will likely compromise further the standard of living among Malawians as cost of living in urban areas rose from 2.7 percent in July to 4.5 percent in August.

CfSC says this could have been made worse if the Malawi Energy Regulatory Authority (Mera) had not blocked the proposal by the Electricity Supply Corporation of Malawi (Escom) to raise electricity tariffs by 18 percent.

The latest basic needs survey report for August shows that in urban areas, the cost of living has gone up from K136,118 to K139, 384 as compared to a decline of nine percent in the same period last year.

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A family of six in Lilongwe now requires K71,227 to meets its basic needs while the same family would need K80,454 to survive in Malawi’s commercial capital, Blantyre.

CfSC notes that as much as the cost of pumping water has gone up, the boards should have adopted a more pro-poor price hike strategy, considering that times are hard and the service which the boards offer is not up to standard.

The report cites Kalondolondo Programme which it says has identified several inefficiencies such as inconsistent bill calculations, lack of clear complaint-handling mechanisms and unreliable water supply.

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Lilongwe Water Board announced in a statement recently that effective August 1, the price of water would be increased by 45 percent, citing challenges such as defaults by institutions as being among the factors that necessitated the increase.

But, CfSC says following a salary survey it conducted in 2014, an average worker receives K44,000 per month and says this figure has not significantly changed despite salary increments which have been given out in the past year.

“With this kind of salary in mind, an average household in Lilongwe is already unable to meet the basic food basket which was at K71,277 as of August, 2015. As if this is not enough, the household would have to cough an extra K2,438 to the K 5, 417 paid in July for the same volume of water, thereby compromising further on its nutritional needs for a good productive health. This could have been made worse if the Malawi Energy Regulatory Authority had not blocked the proposed increase by Escom,” Cfsc says in the statement.

The welfare monitoring body says soaring maize prices and the continuing depreciation of the kwacha have left many households panicking and looking for ways to source extra income so that they can maintain their consumption patterns of basic needs, as their purchasing power declines with each passing month.

It says in the urban areas, from the 2.7 percent rise in monthly cost of living reported in the month of July, 2015, the cost has gone up by a further 1.8 percent in the month of August.

The Economics Association of Malawi (Ecama) earlier observed that although Malawi registered economic growth of about five percent in the 2014/2015 financial calendar, the growth prospects have not trickled down to ordinary Malawians as high interest rates coupled with rising inflation rate have eroded people’s disposable incomes, making it difficult for families to finance domestic needs.

Government expects the economy to remain robust in the current financial year with a projected drop in annual average inflation to 16.5 percent by December.

Economic analysts say that the situation is likely to remain the same in the foreseeable future as high poverty levels prevailing in the country continue to push up food expenditure.

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