The headline inflation could not withstand mounting pressure from rising food and non-food prices as it surged by 0.5 percentage points in September 2021 to 8.9 percent.
The September 2021 inflation rate is higher than the 7.1 percent recorded during same time last year.
According to latest figures from the National Statistical Office, during the period under review, food inflation was seen at 10.9 percent, up from 9.7 percent in August.
Non-food inflation also went up during the month, albeit slightly, from 7.0 percent to 7.2 percent.
Prices of most basic commodities have remained elevated in the country in recent months, which pose a greater threat of possible runway inflation.
For instance, the price of maize—Malawi’s staple commodity—which weighs heavily in the Consumer Price Index (CPI), has been on an upward spiral for five months in a row, with slim chances of an ease in the next months due to the seasonality of the economy.
In September, for instance, the price was averaging K200 per kilogramme (kg) in the country’s major cities.
A report published by the International Food Policy Research Institute shows that, in the month, maize retail prices increased by 5 percent.
A snap survey the Daily Times conducted revealed that, in Mzuzu, the commodity was selling at between K180 and K200 per kg, while in Lilongwe the commodity was being sold at between K190 and K220. In Blantyre, maize prices were in the range of K190 to K280 per kg.
The prices were about 33 percent above the K150 per kg farm-gate price set by the government at the beginning of the harvesting season this year.
As part of the food component, which constitutes about 45.2 percent in the (CPI), maize impacts the country’s economy.
Electricity, housing, water and transport, on the other hand, contribute 31.5 percent to the CPI.
The Malawi Energy Regulatory Authority recently announced a 22.8 percent hike in fuel prices, which could pile more pressure on the non-food component going forward.
In an interview yesterday, economist Exley Silumbu said the situation could persist in the next few months as Malawi, like most developing economies, were dealing with imported inflation where prices of commodities such as fuel were seen elevated on the international market due to a rise in demand.
He said while developed economies had taken a stance by tightening monetary policy instruments to avert a possible stagflation—a situation characterised by slow economic growth coupled with rising prices of commodities—the country had to deploy efforts towards cushioning the impact of such exogenous shocks.
“The rise in food inflation could be partly attributed to an option by speculative traders to hoard on to maize and might ease going forward.
“But we might not have control over some of the external forces, hence, the need to deploy monetary policies that would help lessen the pressure on consumers,” he said.