The Reserve Bank of Malawi (RBM) has reiterated that controlling rising annual inflation requires addressing the supply of maize—the country’s staple crop—which is beyond their mandate.
Annual inflation has been increasing since March this year, reaching 33.3 percent in June compared to 31.8 percent recorded in March 2024, according to figures from the National Statistical Office (NSO).
Food inflation has been a persistent issue, peaking at 44.9 percent in January. Although it decreased to 38.8 percent in March, it rose again to 41.5 percent in June.
These trends have compelled the Monetary Policy Committee (MPC) to revise upwards the annual inflation projection for 2024 to 33.5 percent, from the initial prediction of 30 percent.
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In an interview, RBM Governor Wilson Banda explained that maize supply and demand fundamentally determine prices.
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“Currently, inflation is largely driven by supply issues, particularly maize. As you may recall, our inflation basket includes both food and non-food items. The non-food component is either stable or declining, and this is effectively managed by our policy rate.
“Our policy rate is effective. However, we have very little influence over the food component, such as maize production. Maize availability in Lilongwe, Blantyre, and other areas is something we, as authorities, cannot control,” Banda said.
He added that the situation in Malawi is exacerbated by the fact that there is no maize in the region.
“Countries like Zambia, Zimbabwe and some parts of Mozambique all buy maize from Malawi, which pushes up the price. This, in turn, contributes to inflation. Can we do anything about it? No, we can’t. That is a supply-side shock,” Banda said.
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When asked if the Ministry of Agriculture is doing enough, Banda said, in the short term, the initiative on mega farms is expected to increase the domestic maize supply.
“You know that some of the mega farms in the country produce substantial quantities of maize, which helps moderate the price increase. Without these farms, the price of maize would likely be much higher than it is now,” Banda added.
Minister of Agriculture Sam Kawale was unable to comment when contacted.
Maize prices have been rising in recent months, reaching K45,000 for a 50-kilogramme bag in some parts of the Southern Region, K40,500 in the North and K38,000 in the Central Region for the same quantity.
In a recent interview, Economics Association of Malawi (Ecama) president Bertha Chikadza said that the outlook suggests food inflation, particularly maize prices, will remain high, meaning overall inflation will also stay elevated throughout the year.
“If we examine inflation, food inflation has always contributed significantly to overall inflation, especially this year from the first to the third quarter. Due to El Niño, which affected the country’s growing season this year, there was a low production of food, particularly maize.
“Although food inflation eased slightly in the first quarter due to lower imported inflation and the harvesting season in the second quarter, combined with the distribution of relief food by the government and other organisations, food prices are expected to rise,” Chikadza said.
