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Inflation surges to 7.5 percent

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Headline inflation rose for the first time since December 2019 to 7.5 percent in October, figures from the National Statistical Office (NSO) have shown.

The deviation from a downward trajectory enjoyed for the past 10 months of the year represents a 0.4 percentage points move from the 7.1 percent inflation rate recorded in September.

The October inflation rate is, however, 21.8 percent lower than the 9.6 percent inflation rate recorded in October 2019.

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Flash statistics released by the NSO indicate that the national month-to-month inflation rate for October 2020 stands at 2.5 percent compared to 1.3 percent registered in September, 2020.

“Food inflation rate was recorded at 4.8 percent compared to 2.1 percent registered in September 2020 while non-food Inflation is 0.5 percent compared to 0.6 percent recorded in September 2020.

“The urban month-to-month inflation rate is 1.1 percent. Urban food and non-food inflation rates stand at 2.5 and 0.3 percent, respectively. The rural month-to-month inflation rate registers 3.6 percent. Rural food and non-food inflation rates stand at 5.9 and 0.7 percent, respectively,” NSO indicates.

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It further reads that food and non-food inflation rates stand at 10.9 and 4.4 percent respectively.

Reacting, United Kingdom-based Malawian economist Sane Zuka said the rise in overall inflation was expected during this time because it was pushed by the increasing prices of food items, especially maize.

“Most of the smallholder farmers have sold their surplus harvest and there expectation that we are moving to a time of food shortage. What is important at this time is that the government should ensure that maize-sales depots throughout the country are well stocked.

“This move is critical to managing the negative feedback of consumers’ expectations. Even if the country has adequate food supplies, prices will continue to rise if the peoples’ expectations are not managed. I think at present the government has the capacity and good will to manage both risks,” Zuka said.

Last week, the RBM’s Monitory Policy Committee also revised downwards average headline inflation for 2020 to 8.6 percent from the earlier projection of 9.8 percent.

In December last year, inflation closed on 11.5 percent with an annual average of 9.4 percent—about 0.2 percentage points above RBM’s projected 9.2 percent.

Food inflation rate during the year rose from 10.7 percent in January 2019 to 19.3 percent as at December 2019 while non-food inflation declined from 7.1 percent in January 2019 to 4.5 percent in December 2019.

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