Business

Inflation rate down to 11.1%

NYASULU—Generally this is a common trend

Headline inflation went down by 0.4 percentage points in January 2020 to 11.1 percent, National Statistical Office (NSO) figures show.

Food inflation went down in January to 17.6 percent from 19.3 percent while non-food inflation went up to 5.1 percent from 4.9 percent.

Ironically, the drop in food inflation comes as the maize prices remain high due to a sharp fall in the supply.

The staple grain, as part of the food component, impacts inflation movement heavily given that it constitutes 45.2 percent in the consumer price index (CPI).

The commodity, which was selling at K8, 500 in July 2019 is now trading at the range of K18, 000 and K19 000 in most markets.

Economics Association of Malawi (Ecama) Executive Director, Kettie Nyasulu, said drop in inflation was anticipated.

“Generally, this is a common trend during this period when some farm crops have started to mature. Food inflation usually drives the headline inflation as noticeably is the case when it goes down so does the headline inflation and vice versa.

“We can say the recent drop in food inflation could be explained by the availability of food options such as fresh maize, and pumpkins over this period which has eased the demand pressure for maize on the market thereby impacting on the maize prices,” Nyasulu said.

She added that they expect the downward trend to continue into the harvesting season which will improve the supply of maize on the market and thereby impacting on its price as well.

However economic expert, Edward Chilima, wondered about the trend saying the norm would be to expect an increase in inflation as maize price has been too high.

“The month on month inflation has increased due to maize prices. The annual inflation is higher at 11.1 percent compared to 8.8 percent recorded in the same month last year. I expected inflation rate to keep going up given the maize prices however, as we approach harvest period, the rate will keep declining,” Chilima said.

Average inflation for 2019 stood at 9.4 percent, 0.2 percentage points higher than the 9.2 percent recorded in 2018.

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