Inflation has remained volatile for the greater part of the year, with the Reserve Bank of Malawi missing its medium-term target of 5 percent or 7 percent upper limit by the end of the first quarter of 2021, a situation analysts have rated as scary.
Headline inflation remained on an upward spiral since November 2020, rising to 8.3 percent in February 2021 from 7.7 percent in January.
Between February and June, the inflation rate continued fluctuating but was within the single digit band.
The headline inflation eased in July 2021 to 8.7 percent from 9.1 percent recorded in June.
The central bank admits in its recently published Market Intelligence Report that the country faced myriad challenges including inflationary pressure.
It, however, says, for most Sub-Saharan Africa countries, the pressure was attributed to the rise in energy prices and, in some countries, an increase in food prices.
RBM is further worried that accelerating international oil prices, following the strengthening of global demand, will continue to pose a greater challenge to the inflation outlook across all countries.
In an interview yesterday, RBM spokesperson Ralph Tseka said, despite the risks, the central bank would be implementing tight monitory policies to help contain the pressure.
Tseka said, for instance, that RBM has put in place strategies that would help contain foreign exchange shortages through trading in mining and exporting agricultural products.
“All these are strategies so that, when we go into the lean period, the country should be cushioned in terms of foreign exchange reserves’ accumulation,” Tseka said.
In the Consumer Price Index—an aggregate basket for computing inflation—maize, which is Malawi’s staple crop, contributes about 45.2 percent.
Ironically, this year, maize production has been estimated at 4,581 524 metric tonnes compared to 3,785,712 metric tonnes in the 2019-20 agriculture season.
In an interview, Malawi Economic Justice Network Southern Region Coordinator Mike Banda said the expected surplus in maize output could help instil hope towards containing the exerted pressure on inflation.
“The key for us is how best we maximise the little resources we have at our disposal to boost the economy. We should therefore stop doing business as usual and put strict measures that will curb wastage of resources,” Banda said.
In a separate interview, Economics Professor at Chancellor College Ben Kalua said the country should be worried in only the short-term, but if the situation will not be addressed, the problem will persist.
“The issue of rising oil prices will continue haunting us until we revamp the railway transportation system and we also need to diversify and also woo people to venture into commercial farming rather than for consumption only. That way, this will be contained in the medium and long term,” he said.
Justin Mkweu is a fast growing reporter who currently works with Times Group on the business desk.
He is however flexible as he also writes about current affairs and national issues.