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Experts see ease in inflation pressure

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Bernard Mphepo

The headline inflation rate curve took a slight twist in August, showing some signs of easeing, albeit still rising marginally by 0.4 percentage points to 25.9 percent.

This, according to economists, sets a tone for a possible further easing in the inflationary pressure and a possible deceleration of the headline inflation in the months to come.

Since February this year, headline inflation has been skyrocketing due to rising prices of both food and non-food items.

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According to figures from the National Statistical Office (NSO), in June this year the inflation rate was at 23.5 percent, Then it rose to 24.6 in July and went further up to 25.5 percent in August.

During the month under review, food inflation went up to 33.7 percent from 33.4 percent while non-food inflation also rose marginally to 18.3 percent from 18.2 percent.

However, Centre for Social Concern National Coordinator responsible for Economic Governance Bernard Mphepo said notwithstanding the slight ease, consumers were still feeling the pinch as commodity prices remained elevated.

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He said for example, by now the cost of living is at K307, 000 for a household of two people and it has been increasing, which means that people are still feeling the biting inflation.

“This is a good development but we should not expect the cost of living to start going down. It might just remain within the current threshold because from the past experience, the cost of living in the country never drops,” he said.

Rising inflation rate has been rated among challenges affecting the local economy.

In an attempt to contain the pressure, during its last Monetary Policy Committee meeting in May, the Reserve Bank of Malawi adjusted upwards the policy rate to 14 percent from 12 percent.

Speaking in a recent interview, RBM Governor Wilson Banda hinted on another increase in policy rate if inflation continues to rise.

“When we decide to adjust the policy rate it is not only inflation that we will be looking at. Of course our primary responsibility is price stability and once we determine that the factors are permanent we will take the necessary step but definitely that time we will have to move the policy rate,” he said.

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