Life is becoming tougher by the day for ordinary Malawians in the face of escalating prices of essential goods and services and economics have urged the Peter Mutharika administration to deal with the rising cost of living.
According to figures from National Statistical Office (NSO), the Malawi’s inflation —the rate at which prices of goods and services change— for December 2015 rose by 0.3 percentage points to 24.9 percent from 24.6 percent the month before largely due to soaring food prices.
Prices of basic goods such as cooking oil, sugar and maize, among others, have jumped up to the sky in recent months mainly on account of a weakening of the local currency as importers and traders are passing on the high cost of importing to consumers.
“Overall, food inflation stands at 29.2 percent from 28.9 percent in November 2015.The increase in food inflation has been primarily influenced by rising by rising costs of other food items other than cereals.
“The increase in non-food inflation has mainly emanated from housing, furnishing and transportation costs,” says NSO Stats Flash.
University of Malawi economist professor at Chancellor College, Ben Kalua has urged government to work on taming the rising inflation and adopt measures that would help in diversification of food supply.
“There is need for government to start working now by among other things tallying the expenditure with available with available revenue,” said Kalua.
Kalua argued that government overspending has essentially piled up inflationary pressure on the market.
“Expenditure by government is partly to blame,” he said.
The inflation rate as measured by the Consumer Price Index (CPI) shows that the annual headline inflation rate for 2015 stood at 21.9 percent compared to the annual headline inflation rate of 23.8 percent in 2014.
Reserve Bank of Malawi Governor Charles Chuka said in 2016, monetary policy will aim to bring down annual headline inflation to the target of 14.2 percent in June.
In addition to the inflation target, the bank will aim at maintaining foreign exchange reserve coverage of at least three months of imports by June 2016,” Chuka said in the third monetary policy statement.
Budget assistance from Western donors worth millions of dollars has been withheld for two years now —amid concerns of Cashgate, the plunder of public funds at Capital Hill. Such aid has historically accounted for about 40 percent of the national budget.
The IMF said the loan facility would remain suspended until Malawi’s government met certain targets.
Minister of Finance, Economic Planning and Development Goodall Gondwe also admits that the economy is currently in “a critical point”.Follow and Subscribe Nyasa TV :