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Reserve Bank of Malawi for diversified food consumption

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Reserve Bank of Malawi (RBM) Governor, Dalitso Kabambe, has said Malawians need to diversify their diet by looking beyond the traditional maize and nsima to avoid the commodity dictating the country’s inflation.

Kabambe said this in Lilongwe on Friday during a panel discussion when the International Monetary Fund (IMF) launched the Regional Economic Outlook for Sub- Saharan Africa.

His observation comes after inflation inched up by 0.4 percentage points in October to hit 9.6 percent, largely driven by rising maize prices.

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Maize prices have in recent months skyrocketted averaging K13,000 per 50 kg bag from around K5,000 per bag during harvest time in April.

Currently, food, especially maize, is the major contributor to the Consumer Price Index, with a weight of around 45 percent.

The development means that the abundance or absence of maize determines the direction in which Malawi’s inflation would swing, all things being equal.

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The RBM chief said monetary policy has succeeded in bringing down inflation from around 37 percent to within a single digit in recent months.

“I will blow my own trumpet that as far as monetary policy is concerned we have brought down non-food inflation from around 47 percent in 2012 to around 4.3 percent. To me that is a resounding success of monetary policy because monetary policy works on none food inflation.

“We are at 9.6 percent headline inflation because food inflation is at 16 percent,” Kabambe said.

He said the monetary authorities would keep monitoring how food inflation is progressing.

“On the food side, we would need, as Malawians to change our diet. It can’t be maize alone as food, going forward. We also need to diversify our plate. It can’t be just maize or the time.

“We came from a background where we were eating sorghum, we would eat nsima from cassava flour. We need to find a way of ensuring that maize should not dictate our food inflation in this country all the time,” Kabambe said.

Recently, the central bank said there is no need to press the panic button on inflation.

Earlier, RBM revised upwards the 2019 annual inflation projection from eight percent to nine percent owing to elevated maize prices.

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