Malawi’s inflationary trajectory took a new twist in January 2023 as headline inflation rose, albeit marginally, to 25.9 percent from 25.4 percent recorded in December 2022.
The inflationary pressure was seen easing at the close of 2022, as it went down from 25.8 percent, averaging 21 percent in the year.
The slight drop in headline inflation recorded in December 2022 was, however, ironic as the country was at the peak of the lean season, but it signalled hope for an ease in the rate at which food and non-food prices would be increasing.
Figures from the National Statistical Office show that in January, food and non-food inflation rates stood at 30.5 and 20.4 percent, respectively.
Headline inflation remained on an upward spiral for a greater part of 2022 as commodity prices continued rising, piling pressure on the economy.
But in its Monetary Policy Committee (MPC) report published on Monday, the Reserve Bank of Malawi RBM said it expects the average headline inflation to slow down to 18.2 percent this year from 21 percent recorded in 2021.
RBM anticipates subdued imported inflationary pressures on account of declining fuel and non-fuel global commodity prices.
However, the central bank remained cautious, saying the outlook remains mixed as an elevated inflation risk is still imminent due to structural challenges, among other things.
It says apart from easing supply bottlenecks necessitated by the switch to non-Russia suppliers as well as the UN-initiated Black Sea grain deal, the decrease in global commodity prices is expected to be sustained by weak demand following the prevailing tight financial and monetary conditions, particularly in advanced economies.
“This notwithstanding, the risks from domestic factors remain heightened due to lagged effects of fiscal slippages and exchange rate depreciation, in addition to elevated prices of domestically-produced food commodities on account of the delayed effects of high costs of inputs,” the MPC report reads.
In an interview Tuesday, Centre for Social Concern Programmes Coordinator responsible for Economic Governance Bernard Mphepo said the situation reflects cost of living figures the centre issued recently.
A household of six people required K356,108 to afford the basic need of living in January 2023, up from K328,522 in December 2022.
“This implies that the cost of living increased from December to January. It can be concluded that more Malawians continued to struggle to access basic needs,” Mphapo said.
Economist Gilbert Kachamba said the trend would change as the country exits the lean season.
“We are moving towards stability as the increase is not that alarming. I hope soon the food inflation will start falling. Nonetheless, the inflation rate is still high,” Kachamba said.
The Economists Intelligence Unit projects a year-on-year inflation rate of 13 percent while the International Monetary Fund sees inflation averaging 16.5 percent this yea.
