Malawi inflation rate slows again to 7.7 percent

The country’s headline inflation continues to drop and it is now at 7.7 percent, the National Statistical Office (NSO) has confirmed.

According to NSO, the headline inflation for November has gone one step down from October’s 8.3 percent compared to the headline inflation of 20.1 percent for the same period last year (October 2016).

The continued fall in inflation is largely driven by wide food availability, resulting in prices remaining subdued. Currently, the country’s staple food, maize, is trading at an average price of K4,500 per 50 kilogramme bag.

The November inflation is just 1.4 percentage points shy of the record low of 6.3 percent in December 2010.

Nico Asset Managers have expressed hope that the drop will continue and has since urged monetary authorities to induce a further cut in the policy rate, currently at 18 percent.

“A potential decrease in food availability during the lean period as a result of the lift on the maize export ban may lead to food inflationary pressures,” Nico said.

Inflation averaged 15.11 percent from 2001 until 2017, reaching an all-time high of 37.90 percent in February of 2013 and a record low of 6.30 percent in December of 2010.

The country’s currency, Kwacha, last week registered positive trends when it appreciated against major foreign currencies especially the United States dollar.

Malawi Kwacha has been largely stable for the past one year or so despite the country’s inflation going down to a single digit.

According to the Reserve Bank of Malawi’s (RBM) Financial Market Development, Kwacha appreciated from around K734 to a dollar to K730 this week.

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Hlabezulu Ngonoonda
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The low inflation is reminiscent of late Bingu wa Mutharika’s first term during which the economy undoubtedly improved. GDP growth rates went up and there was an improvement in smallholder agriculture … supported by the continuation of the input subsidy program and intensification of irrigation agricultural programs. Inflation remained in single–digit figures in spite of higher international food and energy prices. Interest rates were the lowest in a decade due to reductions in inflation. Income from exports increased. Reforms to improve budgeting, revenue collection and debt management were put in place. The slogan “let my hands speak for themselves” was… Read more »

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