Maize output will stabilise inflation–Economists

Maize output will stabilise inflation–Economists

Post was last updated: March 11, 2020

By Justin Theu:

Economic experts say the projected increase in maize output this year would help contain inflationary pressure in the short to medium terms, given the crop’s impact on inflation movement.

This comes as Malawi is expected to produce about 3,691,866 metric tonnes of maize this season, up from 3,391,924 metric tonnes produced during the 2018/2019 season, representing an 8.8 percent increase.

Some people in some districts, especially in the Southern Region, have already started harvesting the produce.

The staple grain, as part of the food component, impacts inflation movement heavily given that it constitutes 45.2 percent in the consumer price index.

In January 2020, headline inflation went down by 0.4 percentage points to 11.1 percent.

Food inflation went down to 17.6 percent from 19.3 percent while non-food inflation went up to 5.1 percent from 4.9 percent.

Ironically, the drop in food inflation came as the maize prices remained elevated due to a sharp tank, the Economics Association of Malawi (Ecama) predicts a drop in food and non-food inflation in the coming months.

Ecama Acting Executive Director, Kettie Nyasulu, said amid some possible exogenous shocks, outlook for inflation looks positive.

“The rains have been good this year and we believe that we may have an improved harvest,” Nyasulu said.

An economics lecturer at The Polytechnic, Abel Mwanyungwe, said with an anticipated rise in maize output the country, the country should expect inflation to stabilise.

He, however, said the country needs to consider diversifying it consumption base as heavy reliance on maize has affected economic growth strides for the country.

In a separate interview, Chancellor College economics professor, Ben Kalua, said while inflation outlook looks positive, the government should be quick in putting measures in place to avert possible effects of coronavirus spread to the local economy.

Average inflation for 2019 stood at 9.4 percent, 0.2 percentage points higher than the 9.2 percent recorded in 2018.

The Reserve Bank of Malawi is looking forward to an inflation rate of 5 percent by 2021.

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