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Economist Intelligence Unit adjusts Malawi inflation projection

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The Economist Intelligence Unit (EIU), a research and analysis department of the Economist Group, has revised Malawi’s average inflation rate target for 2022 to 22 percent from an earlier projection of 17 percent.

The revised projection has been carried in the September Monthly Economic Review from financial advisory firm, Bridgepath Capital Limited.

According to the report, the revision is on the back of global commodity price pressures, the 25 percent devaluation of the Kwacha and a combination of domestic and foreign factors that render monetary policy ineffective in restraining domestic inflation.

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For 2023, the EIU anticipates inflationary pressure to ease with annual inflation averaging 17.6 percent.

“This is on account of projected easing global food and fuel pressures, despite an expected 100 percent rise in electricity tariffs.

“Over the 2024- 26 period, inflation is anticipated to decline at a faster rate, reaching an average of 8 percent in 2026 as global and domestic price pressures recede,” the report reads.

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By August this year, headline inflation increased to 25.5 percent from 24.6 percent in July due to increased food and non-food inflation.

During the month, food inflation increased to 33.4 percent from 32.5 percent while non-food inflation increased to 18.2 percent from 17.5 percent.

The revised projection is in line with the Monetary Policy Committee’s average annual inflation of 23.2 percent for 2022 from an earlier projection of 12.3 percent.

Rising inflation also saw the central bank adjusting the policy rate to 14 percent from 12 percent in a move to arrest rocketing inflation.

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