The Reserve Bank of Malawi (RBM) has revised upwards the inflation outlook for 2022 to average 10.5 percent from an earlier projection of 8.9 percent.
This is contained in a monthly economic report for February published by Nico Asset Managers.
This comes at a time prices of commodities continue rising in the country.
The report indicates that the headline inflation rate for February 2022 is 13 percent compared to 12.1 percent in January and 8.3 percent in February 2021.
The development was mainly attributed to an increase in both food and non-food inflation.
“According to RBM, inflationary pressures are likely to rise throughout 2022, mainly due to seasonal increase in prices of domestically produced food items, imported inflation and the impact of Storm Ana.
“Reflecting these pressures, the inflation path has shifted upwards compared to MPC forecasts made in November 2021. The annual average headline inflation for 2022 is now projected at 10.4 percent and it is expected to average 10.5 percent in the first quarter of 2022,” the report reads.
“Disruptions to trade routes are also expected to increase transportation costs, exacerbating the supply chain disruptions resulting from the impact of the Covid-19 pandemic. As a result, the upside risks to inflation remains high, globally, and locally”.
However, the just passed 2022-23 national budget is premised on assumptions that real gross domestic product (GDP) will grow by 4.1 percent in 2022 and 4 percent in 2023, average inflation rate will moderate 9.1 percent during the fiscal year, with a policy rate of 12 percent among others.
In an interview, Executive Director of the Economics Association of Malawi Frank Chikuta said prospects of non-food inflation decreasing in the course of the year are minimal because of global trends.
“…for example prices of fuel and fertiliser transportation are not going to decrease; so, what will drive inflation over the year is probably food inflation but, as we know the food inflation is also faced with a number of risks including the cyclones and delayed onset of rains during the 2022-23 agriculture season,” Chikuta said.
Malawi University of Business and Applied Sciences-based economist Betchani Tchereni said inflation could average 14 percent in 2022.