Inflation, the rate of increase in prices over a given period of time, increased by 11.7 percentage points to average 21 percent in 2022 from 9.3 percent the preceding year, figures from the National Statistical Office (NSO) have shown.
The figures, released by the NSO Thursday, further show that the monthly inflation rate for December stood at 25.4 percent.
This represents a 0.4 percentage points drop from the 25.8 percent inflation rate recorded in November 2022.
A statistics flash published by the NSO holds that the drop in December was mainly due to a fall in food inflation to 31.3 percent from 33.4 percent in November 2022.
Non-food inflation, however, increased to 18.6 percent from 17.7 percent.
“The national month-to-month inflation rate for December 2022 stands at 2.6 percent. Food inflation rate is at 3.4 percent while non-food inflation rate is at 1.6 percent,” the stats flash reads.
Programmes coordinator responsible for economic governance at the Centre for Social Concern Bernard Mphepo said such an increase between 2021 and 2022 only shows that consumers endured a high cost of living.
He said their studies have shown that, between the two years, the cost of living for households almost doubled, forcing households to adjust their consumption levels.
“The behaviour of inflation in 2023 will depend on the harvest for the season because the highest contributor to rising inflation last year was food inflation. If we will not have enough food we might face a similar situation,” Mphepo said.
In a separate interview, economist Edward Chilima said the combination of currency devaluation, the resultant fuel price increases and shortages and the inevitable imported inflation due to Covid and wars was damaging to the economy.
He said it is not surprising that inflation moved from 9.3 to 22 percent.
“Prices of almost all commodities in the shops show this clearly. These shocks were also exacerbated by speculative maize price increases, which was also unprecedented. Good to see elements of reversal of this trend in the December and November figures. It shows resilience of the economy.
“Going forward, we need to manage the speculative and fear game in the food sector, maize to be specific. Possibly we need to supply the market with maize from reserves and Admarc to give the market confidence.
“Assuming no further external shocks beyond our control, and given we are now heading towards the harvest season, and also given tight fiscal prudence, we can look into the future with optimism. Inflationary pressures in 2023 are likely going to be less than in 2022, all factors being constant,” Chilima said.
But Malawi Economic Justice Network Coordinator for the Southern Region Mike Banda said considering trends in the Affordable Inputs Programme, it is unlikely that the rate will behave any better this year because Malawi depends heavily on bumper harvests.
“Going forward, it only depends on what we will set out in the 2023-24 national budget in terms of realistic government expenditures, projections and how best we capture forex circulating in the black market,” Banda said.
Rocketing inflation affected various macroeconomic fundamentals in 2022 witnessed by the Reserve Bank of Malawi’s decision to adjust upwards, on two separate occasions, the policy rate.
The policy rate stands at 18 percent from 12 percent in 2021.
Meanwhile, government targets that the inflation rate should average 21.8 percent this year at the back of strategies that aim at increasing production for the country and tightening government expenditure.
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.