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Inflation met with mixed reactions

News that year-on-year inflation has climbed to 8.1 percent in January 2018 from 7.1 percent in December 2017 has been met with mixed responses with some experts indicating that Malawi is still doing fine to tame inflation while others have said the development is not surprising given Malawi’s history of inflation volatility.

In an emailed response, International Monetary Fund (IMF) Resident Representative to Malawi, Jack Ree, said the pick-up of inflation was expected and that the risk is still there that the gains made in macroeconomic stability may be reversed unless a strong and credible safeguard is put in place.

“However, there are some silver linings. First, non-food inflation continued to ease by ½ percent in January, following a trend of steady disinflation since early last year….and this is going to have some entrenchment effect on inflation expectations,” he said.

In a separate interview, President of the Economics Association of Malawi (Ecama) Chikumbutso Kalilombe, said the trend is not surprising and reflects the reality on the ground but said people should rather be worried about developments including claims that government allocated K40 million each to 86 Members of Parliament, most of whom voted against the Electoral Reforms Bill.

Kalilombe said this puts into question whether expenditure cuts announced recently by the government have really been well rationalised.

“If this expenditure has been put up as a priority surviving the fiscal pressure, then, we wonder whether these were really done wisely.

“We know of long-term impact projects that have been pended and wonder what the urgency with this was all about,” he queried.

Chancellor College Economics Professor, Ben Kalua, said the fact that inflation is still within single digit is something to smile about and shows that the country is doing well to keep inflation in check.

He said inflation may climb up to nine percent but estimates that in the coming months as the country moves towards harvest, availability of food may moderate inflationary pressures.

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