A 2024 publication by the World Bank, Africa’s Pulse, revealed that Malawi has the third highest overall inflation and food-inflation rates in Africa.
Continued rise in inflation rate could have undesirable consequences on the economy
In agreement with the report, Reserve Bank of Malawi (RBM) spokesperson Mark Lungu said the major source of Malawi’s inflation is the shortage of food, which is why policies to unlock supply side bottlenecks remain critical in managing inflation.
“Much as the central bank has implemented tight monetary policy to manage the demand side, availability of food remains critical to manage the supply side of the equation,” Lungu said.
Titled ‘Tackling Inequalities to Revitalise Growth and Alleviate Poverty in Africa; the publication ranks Malawi third with overall inflation recorded at 35 percent in January and 33.5 percent in February after Zimbabwe (34.8 percent in January and 47.6 percent in February) and Sierra Leone (47.42 percent in January and 42.52 percent in February).
Malawi is also third on the list of countries with the highest food inflation after Egypt and Sierra Leone.
The Breton Woods institution has since tipped countries with stubbornly high levels of inflation such as Malawi, Ethiopia, Zimbabwe and Sierra Leone to remain restrictive on the monetary policy stance.
It further emphasises the need for economic policies to foster inclusive growth as the inability of the region to sustain growth over longer horizons has resulted in sub-Saharan Africa falling behind the rest of the global economy.
“The median rate of inflation in the region is expected to drop from 7.1 percent in 2023 to 5.1 percent in 2024 and 5 percent in 2025–26. The lower inflation in Sub-Saharan Africa could be attributed to the normalisation of global supply chains, the steady decline in commodity prices and the effects of monetary tightening and fiscal consolidation across countries in the region.
“Disinflation efforts are expected to continue although at differing paces across countries. There is risk of a slight acceleration of inflation among countries holding elections this year,” the publication reads.
In a separate interview, economist Edward Chilima said the development shows that the country has a long way to go to come out of the inflation predicament.
He added that there is a need for the government to prioritise initiatives that contribute to food security and, at the same time, rethink about some interventions being undertaken.
“It means all the developmental efforts are not yielding the required results; so, it should be a cause for concern and the initiatives such as mega farms and cooperatives need to be promoted because they can help in contributing to food security in as much as they are also being affected by floods and cyclones,” Chilima said.
Meanwhile, Malawi’s headline inflation fell by 1.7 percentage points to 31.8 percent in March from 33.5 percent in February, thanks to improved food availability.
In a recent interview, Secretary to the Treasury Betchani Tchereni said Malawi’s economic situation is improving each passing day.
“After November 2023, the economic data has started to be different, a little more positive. For instance, headline inflation has started to ease downwards, foreign exchange reserves are higher than what the report, food inflation is going down and there is direct budgetary support,” Tchereni said.
The government expects the economy to grow by 3.2 percent in 2024 and 4.8 percent in 2025 on the back of increased industry activity, contained inflation and improved supply of foreign exchange mainly from the donor community.
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Publish date : 2024-04-18 07:00:00
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