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Inflation rises to 9 percent

Households feel pinch

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John Kapito

Malawians continue feeling the pinch of rising cost of living recorded at K203,568 for a household of six in June 2021, coupled with a surge in headline inflation seen at 9.1 percent during the month under review.

In May 2021, headlined inflation was seen at 8.9 percent.

Figures from the National Statistical Office (NSO) published on Wednesday show that the national month-to-month inflation rate for June 2021 stands at -0.2 percent compared to -0.3 percent registered in June 2020.

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Food inflation rate was seen at -0.7 percent compared to -0.8 percent registered in June 2020 while non-food inflation was seen at 0.3 percent compared to 0.2 percent registered in June 2020.

“The headline inflation rate for June 2021 stands at 9.1 percent compared to 8.5 percent registered in June, 2020. There is an increase of 0.2 percent in the headline inflation rate from previous month. Food and non-food inflation rates are at 11.1 and 7.2 percent, respectively,” indicates NSO in its June 2021 Consumer Price Index.

Economics Association of Malawi Executive Director Frank Chikuta said it was ironic that the headline inflation was seen rising at the peak of the harvesting season.

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“We were expecting a downward trend in food inflation to persist to August or September 2021 and only reverse when we approach the lean period. Factors that could explain the turnaround in food inflation are the price controls, commonly referred to as farm gate prices, exports of food, and basal effects when compared to the previous year.

“The increase in the non-food component was expected due to developments in the exchange rate, which has a direct impact on non-food inflation. Going forward, we expect moderate inflationary pressures to persist which will result in marginal increases in headline inflation,” Chikuta said.

Meanwhile, a basic needs basket report published by the Centre for Social Concern (CfSC) for a household of six people shows that the cost of living is expected to start rising.

The cost of living has been on the decline since January 2021 when it hit a record peak of K214, 914 from an upward trajectory since July 2020 at K164, 316.

This represents a year-on-year increase in cost of living of 28.3 percent.

CfSC Economic Governance Programmes Officer Bernard Mphepo said expectations were that the cost of living should continue on a downward spiral owing to a bumper maize yield.

“This trend is a clear indicator that low salaried workers have not benefitted much from this year’s good harvest. The decision by government not to increase minimum wage from K50,000 will exacerbate the problem since more Malawians will continue living below the poverty line,” Mphepo said.

In an interview, Consumers Association of Malawi, Executive Director John Kapito said an independent analysis of the cost of living conducted by the association shows that it currently stands at K297,000.

“Food prices have drastically gone up. The weakness of the Kwacha continues to have a strong push on key commodities and that will have serious effects from the month of August onwards.

“…the other challenge is the continued Covid lockdowns in most of our neighboring importing countries where scarcities of goods that we import are becoming scarce and pushing most prices of essential goods up, thereby pushing our cost of living high,” Kapito said.

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