Reserve Bank of Malawi (RBM) Deputy Governor for Economics and Regulation Kisu Simwaka has expressed optimism that inflationary pressure would start easing as some parts of the country start harvesting.
This is despite an increase in headline inflation in February to 30.7 percent from 28.5 percent in January largely due to a rise in food inflation.
Simwaka wrote on his Facebook page, acknowledging the significant strain on household budgets caused by escalating prices, particularly among low-income families who “devote more than half of their budget to food.”
“Looking ahead, inflation appears to be much closer to its peak, and barring any fresh shocks, food inflation is expected to start declining at the start of the crop harvest, as food prices stabilise,” Simwaka said.
He hinted that monetary policy is already sufficiently tight to contain price pressures and gradually bring inflation down to single digits.
However, according to Simwaka, inflation’s return to single digit might take longer than anticipated due to lingering pressures, high degree of uncertainty in the inflation outlook and the still-strong consumer demand.
Economics experts, however, remain divided on the outlook.
In an interview, economist Marvin Banda took a more pessimistic stance, arguing that there is nothing in the macroeconomic climate that suggests that inflation will reduce to single digits.
“It would take consecutive years of stability in both food production and non-food prices for that to occur,” Banda said.
Economics Association of Malawi President Bertha Chikadza said inflationary pressure continues straining household budgets, particularly for low-income earners.
But Chikadza remained upbeat that expected lowering in food prices at the peak of harvest season would contain the pressure.
A recent stats flash published by the National Statistical Office indicates that non-food inflation also rose to 18.5 percent in February from 16.9 percent in January, indicating that price pressures are broadening beyond the food sector.
