Malawi’s headline inflation inched up by 0.3 percentage points to 9.3 percent in July 2019 as food prices continued biting hard, a development the Reserve Bank of Malawi (RBM) has rated as surprising.
Published figures from National Statistical Office (NSO) show that food inflation stood at 14.2 percent in July 2019 from 13.7 in June.
Non-food inflation was seen at 5.5 percent in July 2019 from 5.4 percent during the preceding month.
Price for maize, Malawi’s staple food, has been on an upward spiral in the past three months, currently trading between K8,500 and K10,000 per 50 kilogramme bag in some parts of the country.
Maize, as part of the food component, impacts the country’s economy given that it constitutes 45.2 percent of the Consumer Price Index (CPI), which is an aggregate basket of goods and services for computing inflation.
RBM spokesperson, Mbane Ngwira said the general rise in food inflation during this period was a surprise since the records, as estimated by Ministry of Agriculture, indicate that Malawi had produced a surplus of maize.
“From the turn in June, the July outturn was expected. However, we take solace in non-food inflation which is still around 5.5 percent. This is the area that monetary policy focuses on.
“Consequently, the average inflation projection for the year still remains within single digit. This is premised on the fact that all other factors affecting inflation in the country remain stable,” Ngwira said.
Reacting, Economics Association of Malawi Chief Executive Officer, Maleka Thula, said the increase in headline inflation was expected.
He said the magnitude of the increase in the overall inflation was not very big to cause a big concern and remains in the single digit.
“However, the worry is the rate at which food prices are increasing, given that the monetary authorities have limited levers to influence food inflation. With that in mind, our only hope is that this is not being driven by market fundamentals of demand and supply.
“It is our expectation that prices of maize will generally stabilise as it is reported that there is enough maize on the market to meet the country’s demand. Therefore, we should expect prices to remain largely stable going forward,” Thula said.
Earlier, RBM revised upwards the 2019 annual inflation projection from eight percent to nine percent owing to elevated maize prices.