The Reserve Bank of Malawi (RBM) has said that food prices will continue to rise on the back of myriad factors including recent droughts reported in East Africa as well as floods in Ghana, China and some parts of Europe.
These, the central bank fears, will continue affecting food supply on the global market, thereby piling more pressure on economies like that of Malawi.
The central bank has expressed this in its Market Intelligence report issued on Tuesday.
RBM indicates in the report that rising prices, coupled with lingering effects of the Covid pandemic, geopolitical tensions and the continued conflict between Russia and Ukraine threaten the stability of inflation.
The central bank says it is not surprising that the majority of central banks are tightening their monetary policy stance in order to curb the rising inflation, anchor inflation expectations and pre-empt any second-round effects of the supply-side pressure to inflation.
“With prices expected to remain high in the near-term, further monetary policy tightening should be expected,” the report reads.
For example, the report indicates that during the month under review, food inflation edged up to 33.7 percent from August 2022’s position of 33.4 percent.
According to Ifpri Malawi Monthly Maize Market Report for September 2022, maize prices increased by an average of 3.1 percent to K334 per kilogramme (kg) from 324 per kg the preceding month.
Economist from the Malawi University of Business and Applied Sciences Betchani Tchereni said Malawi might not be hit hard by global food supply chain disruptions as the country produces its own staple food.
He however said that the pinch might be felt to an extent as the country is in the lean period.
“Our fight against rising inflation will be tough but it would not have been that tough if we implemented programmes such as mega farms that will make sure that we entirely consume what we produce without worrying about imports,” he said.
Rising inflation has been one of the headaches for the Malawi economy as seen at 25.9 percent in the month under review with food inflation being the main driver.
To arrest the inflation rate, RBM has adjusted upwards the policy rate to 18 percent from 14 percent, a move which has received mixed reactions.
Headline inflation has remained on an upward spiral for a greater part of the year, seen at 25.9 percent September.
Last week RBM adjusted downwards the average inflation rate target for 2022 to 21.5 percent from an earlier projection of 23.2 percent which the central bank set in July.
The central bank says inflation pressures continue to heighten, as evidenced by the upsurge in average headline inflation to 25.3 percent in the third quarter of 2022 from 19.4 percent in the second quarter.
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.