Food prices to go further up


A new report estimates that although food, including maize and pulses, will be readily available in the last few months of 2016, Malawians will need more resources to make purchases as prices are expected to steadily rise going forward.

The rising food prices are expected to weigh heavily on overall inflation, a situation which will make the prices of goods and services even more expensive in the last half of the year.

The report, released on Tuesday by Alliance Capital Limited, observes that the rise in inflation rate is on account of the maize deficit which has caused maize prices to rise and in the process pushing up food inflation.


“The nature of inflation in the last half of 2016 will predominantly be influenced by rising costs on account of a depreciated exchange rate and rising food prices. We expect costs as opposed to demand to push inflation up as the purchasing power of most economic agents is still weak. Food inflation will weigh heavily on overall inflation,” Alliance Capital said in the report.

Another report released in June by the Centre for Social Concern also showed that the price of basic commodities such as maize and tomatoes increased by an average of between 17 and 30 percent in that month, placing more challenges on low income earners to finance their domestic needs.

Although government expects the economy to remain robust in the current financial year with a projected drop in annual average inflation to below 20 percent by December, economic commentators have observed that inflation is likely to remain high in the absence of strategies to enhance food production.


In an earlier interview, the Malawi Confederation of Chambers of Commerce and Industry blamed instability in key macroeconomic indicators on policies that Malawi is implementing which are exerting pressures on consumption rather than incentivizing production.

MCCCI believes incentivising production would be a step towards bridging the gap between production and imports which may in turn bring down inflation to acceptable levels.

The body has since advised government to shift its focus from lumping resources on unproductive initiatives like the fertiliser subsidy which do not bring enough production levels to ensure food security.

As it stands, the Reserve Bank of Malawi’s midyear inflation rate forecast of 19.3 percent has been missed and Malawi’s year on year inflation of 24.6 percent is currently the second highest in the Common Market for Eastern and Southern Africa.

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