The Reserve Bank of Malawi (RBM) has maintained its position that headline inflation—the rate at which commodity prices change at a given time in an economy — would moderate to 22 percent by the last quarter of 2025.
The estimate is below the above 25 percent inflation in 2025 by the World Bank, which in its recent Malawi Economic Monitor said rising food prices due to weak domestic production and continued growth of the money supply will likely continue exerting pressure.
This comes after months of rocketing inflation which has seen commodity prices rising supersonically.
But the central bank premises its optimism on prospects for a good harvest this year.
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RBM Director of Financial Market Chakudza Linje said the projection is also attributed to favourable base effects and the supportive monetary policy stance.
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She was speaking yesterday in Mzuzu at a Monetary Policy Technical Forum where the central bank engaged stakeholders on the decisions of its recent Monetary Policy Committee (MPC) meeting.
Among others the committee decided to maintain at 26 percent the policy rate, a key driver of interest rates on loans.
“We have seen that the stance the committee took in the last couple of meetings has dampened the price rise in the non-food inflation so that is giving us the comfort to say that it will remain subdued.
“Again, we are looking at crop production this year amid projections of good rains and maize harvest. That should dampen the price for food and at the end of the day we expect that together we will see the decline of inflation by the end of the year,” she said.
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On the engagement Linje said RBM does not have the monopoly of wisdom as such they also depend on feedback and suggestions from the public that informs the decision by the MPC.
The policy rate has remained stable throughout the past nine months after hiking it by a cumulative 12 percentage points, from 14 percent in May 2022 to 26 percent in March 2024.
RBM data show that inflation declined to an average of 29.2 percent in the last quarter of 2024, from an average of 33.9 percent in the previous quarter as compared to 31.5 percent for the last quarter of 2023.
In December 2024, headline inflation accelerated to 28.1 percent from 27 percent in November 2024 primarily influenced by food inflation increasing to 35.6 percent from 33.7 percent in November 2024.
