Inflation under control— Reserve Bank of Malawi

Post was last updated: April 20, 2018

The Reserve Bank of Malawi (RBM) has said it is confident the country’s headline inflation will decline in the coming months, despite sprouting in March.

Malawi’s headline inflation jumped by 2.1 percent in March, from 7.8 percent to 9.9 percent, raising fears that it may go back to double digits in the near future.

But RBM spokesperson, Mbane Ngwira, said looking at the month-on-month inflation, figures point to falling inflation.

On a month-on-month basis, inflation registered a deflation of minus 0.9 percent from an increase of 2.1 percent in February 2018.

This was explained by a slowdown in food prices by 2.7 percent following commencement of the harvesting period.

Non-food prices rose, albeit marginally, by 0.7 percent. The increase in non-food prices was largely due to a 2.2 percent rise in alcohol and tobacco sub-category.

Ngwira said the anticipated continued fall in month-to-month inflation is likely to pull headline inflation downwards.

“The excess supply of maize in response to crises of 2015/2016 resulted in low consumer price index in 2017. This will likely continue to affect the annual inflation figures for 2018. The current harvesting period will lead to lower inflation in the foreseeable future.

“The effect of the harvest, however, might be more pronounced in declines in month-on-month inflation, while the base effects may continue influencing outturns in the annual headline numbers,” Ngwira said.

He further said, going forward, the stability of the kwacha exchange rate against major trading currencies and stability of fuel prices are expected to support the disinflation process.

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