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Industry unmoved by single digit inflation

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The Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has said it is not carried away by the country’s achievement of a single digit inflation.

Zomba-based National Statistical Office last week indicated that Malawi’s inflation fell from 10.2 percent in July to 9.3 percent in August buoyed by continued food availability.

This is the first time in six years Malawi has achieved single digit inflation since December 2011 when inflation was recorded at 9.8 percent.

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But MCCCI Chief Executive Officer, Chancellor Kaferapanjira, said while recording a single digit inflation is good news for the country, industry players remain pessimistic about its sustainability.

Among others, analysts argue that the country has managed to record a single digit inflation by suppressing the price of maize through the enforcement of a maize export ban.

The fall in inflation in recent months has seen interest rates falling and may fall even further in the coming months.

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Kaferapanjira said industry players still believe the prevailing low inflation is not sustainable.

“Look here, the country has floating interest rates. As businesses, we would like to see interest rates that are low and sustainable.

“But looking at the current environment, the recent fall in inflation looks unsustainable, so chances are high that the falling rates we are celebrating today may end up rising again in the medium to long-terms,” Kaferapanjira said.

He said the country needs to develop sustainable measures to ensure that food is available at all times.

Kaferapanjira further said Malawi needs to strengthen its industries to ensure that they venture into import substitution to arrest imported inflation.

While applauding authorities for the single-digit inflation, Indigenous Businesses Association of Malawi (Ibam) president, Mike Mlombwa, appealed to authorities to put strong measures to ensure that inflation keeps falling.

Mlombwa expressed hope that the single digit inflation would move the Reserve Bank of Malawi’s Monetary Policy Committee to further slash the policy rate from the current 18 percent, which may force commercial banks to further reduce lending rates.

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