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Reserve Bank of Malawi lowers 2022 inflation target

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The Reserve Bank of Malawi (RBM) has adjusted downwards the average inflation rate target for 2022 to 21.5 percent from an earlier projection of 23.2 percent which the central bank set in July.

The revised figure is contained in the fourth Monetary Policy Committee (MPC) statement released on Friday.

The MPC also adjusted upwards the policy rate to 18 percent from 14 percent.

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The MPC statement, however, says inflation pressures continue to heighten, as evidenced by the upsurge in average headline inflation to 25.3 percent in the third quarter of 2022 from 19.4 percent in the second quarter.

Looking ahead, the central bank says delayed pass-through of past increases in food and energy prices from global commodity markets to domestic consumer prices could sustain high inflation for some time.

“Consequently, the 2022 annual average inflation is projected to rise to 21.5 percent from the outturn of 9.3 percent registered in 2021. In 2023, headline inflation is projected to rise further to an average of 21.8 percent,” the statement reads.

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Centre for Social Concern Programmes Coordinator responsible for Economic Governance Bernard Mphepo said the development does not mean that the cost of living will go down.

He said the best government can do is to realign the budget with trends during the mid-year review to cushion the citizenry.

“Currently, the cost of living is at K307,000 for a household of six people and indications are clear that this may rise or remain the same in the near future but the government should make sure that the citizens are cushioned,” he said.

Rising inflation has been a thorn in the flesh of the Malawi economy, forcing government entities to take measures so that it is arrested.

However, the inflation rate curve which started rocketing in February this year has started flattening in the months of June, July, August and September as the headline inflation rate for last month has been recorded at 25.9 percent which is a meagre 0.4 percentage point increase from August.

According to figures from the National Statistical Office, in June this year, the inflation rate was at 23.5 percent; then it rose to 24.6 in July and slowly went further up to 25.5 percent in August and is now at 25.9 percent as of last month.

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