Despite a 0.7 percentage points drop in inflation in the month of August, the impact has not made much difference in the lives of ordinary Malawians as the cost of living continues to be high.
Industry has not been spared. Most companies are complaining of the difficult economic times and dwindling buying power, which has compromised operations.
In the month of August, inflation dropped to 22.8 percent from the preceding month’s 23.8 percent according to figures from the National Statistical Office (NSO). The figure remains one of the highest in the Southern African Development Community and is 1.8 percentage points higher than the 21 percent annual inflation target set by the Reserve Bank of Malawi in January.
The situations means it is becoming harder for majority Malawians to come out of the poverty trap. A report recently named Malawi the poorest country in the world.
A snap survey conducted by Business Times in Blantyre found that most low-income earners in the country continue facing economic challenges as the gap between the cost of living and what they get at the end of the month remains too wide.
Patricia Malinyole, a fresh foods vendor in Ndirande said demand for basic commodities has significantly gone down in light of dwindling buying power.
“Most people are unable to make ends meet and cost of living has in the recent past gone up. Most businesses are equally compromised,” she said in an interview.
Another trader we spoke to in Blantyre, Walkot Chatha, lamented the drop in profits as the economic environment becomes more challenging.
“Prices of goods have more than doubled within a year. This is astonishing and it is affecting most lives,” he said.
Recently, Centre for Social Concern (Cfsc) said in its basic needs basket statement that the cost of living for an average family of six living in the cities of Lilongwe, Zomba and peri-urban of Mangochi had risen to K187,652, K162,090 and K172,609 in July from K182,484, K157,450 and K167,109, respectively.
Economics Professor at Chancellor College Ben Kalua said in an interview the continued unstable fluctuation in the rate will continue affecting planning of both families and businesses.
According to Kalua, to deal with the trend, there is a need to tame the seasonality of inflation.
“Economic planners should not be surprised with the trends. Government should take a longer-term preventive measure and iron out the seasonality aspect of inflation. To the consumers, inflation is not the figure but rather the changes in prices of commodities,” said Kalua.
Consumer rights activist and Executive Director for the Consumers Association of Malawi, John Kapito, said the upward spiral of cost of living will continue affecting majority Malawians unless authorities tame it.
“If our percapita income has gone down, our inflation must be over 100 percent. The ordinary person is finding it harder even to budget based on what we are getting. I don’t think the current situation makes anybody to stand up and plan effectively,” Kapito said.