By Benadetta Chiwanda Mia:
Malawi Economic Report for November, published by investment advisory firm Bridgepath Capital Limited, has shown that inflation averaged 33.3 percent between January and October 2024.
The figure is 0.8 percentage points above the Reserve Bank of Malawi (RBM)’s projected annual average inflation for 2024 of 32.5 percent.
Furthermore, it is 4.6 percentage points above the 28.7 percent annual average inflation recorded in 2023.
“Malawi faces inflation risk. As of October 2024, the 10-month average is 33.3 percent. The 2025 inflation projections for Malawi from various published sources range between 15.3 percent and 28.3 percent.
“Inflation is expected to ease due to the improvement of the agricultural sector, but downside risks to the outlook include deficit financing and exchange rate weakness,” the report reads.
This signifies continued intense pressure on consumers’ buying power, orchestrated by recent increases in commodity prices.
However, RBM believes inflation will moderate in 2025 to average 15 percent before easing further to 6 percent in 2026.
In an interview, economist Marvin Banda said it was troubling that institutions could not reach a consensus on the actual figure for inflation, mainly due to the capacity of operators and tools that are used.
“The reality is that inflation is higher than what is being measured by the fallacious CPI [Consumer Price Index] which is no reflectivity on what Malawians are experiencing. Inflation is the derivative of the consumer price index in an economy. Malawi is predominantly agri-based, meaning that the food component poses the greatest threat on a cyclical basis.
“The staple being maize typifies that when there’s a disturbance to the production of maize, then the negative deviation causes an inverse effect on the consumer price, which then raises inflation. Even if food is available, debt repayment itself would keep inflation elevated because government would still require money to service its obligation,” Banda said.
In a recent interview, President of the Economics Association of Malawi (Ecama) Bertha Bangara-Chikadza said, as already anticipated in reports by RBM, inflation should go down more this month if maize supply is intensified in the Southern Region.
Another economist, Velli Nyirongo, said Malawi’s inflation rate in 2025 is likely to fall within the moderate range of approximately 23 to 27 percent.
He said food prices and supply constraints play a critical role as both the International Monetary Fund and World Bank have projected lower inflation rates based on anticipated declines in food prices.
“Food inflation in Malawi is highly sensitive to both domestic agricultural output and global price trends. Any adverse weather conditions or disruptions in international supply chains could hinder the expected decline in food prices, leading to more persistent inflation than some forecasts predict. “However, given ongoing challenges in the implementation of the Affordable Inputs Programme, if food supply issues persist, they may add to inflationary pressures,” Nyirongo said.
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