Inflation drops to 7.9%

By William Kumwembe:

Malawi’s headline inflation as measured by the Consumer Price Index (CPI) continued on a downward spiral in February 2019, seen at 7.9 percent, figures which National Statistical Office (NSO) released have shown.

The rate is down from 8.8 percent registered in January 2019.

Despite the month-on-month drop, the inflation rate remains 0.1 percentage points higher than that recorded in January 2018.

The NSO figures show that, in February 2019, food inflation went up to 10.8 percent from 10.7 percent recorded in January.

Non-food inflation, however, went down to 5.4 percent in February 2019 from 7.1 percent registered in January.

The rise in food inflation was partly influenced the elevated prices of Malawi’s staple food, maize.

Maize prices have risen by 20 percent since January from an average of K10,000 per 50 kilogrammes (kg) bag to K12,000 per bag.

In some parts of the country, households were struggling to buy the commodity with many opting to buy small portions just to keep them for a day or two.

A recent visit to selected townships in Blantyre revealed long queues at Agricultural Development and Marketing Corporation (Admarc) depots where the commodity is trading at K7,500 per 50kg bag

In an interview yesterday, Economics Association of Malawi (Ecama) Executive Director, Maleka Thula, said the continued decline in inflation would bolster confidence in the economy.

He said the outturn is in line with Ecama expectations and is largely due to pass-through effects of downward revision in the domestic fuel pump prices and relatively stable exchange rate.

“However, the extent of the impact of floods on agricultural output remains unclear at the moment. If the floods significantly reduce the productivity then this will distort earlier inflation expectations especially from food channel,” Thula said.

In its 2018 Annual Economic Report, Nico Asset Managers said, as Malawi approaches maize harvest season, food prices are expected to start declining.