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Saturday, April 20, 2024

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    Based on the Consumer Price Index (CPI) released by the National Statistical Office (NSO), the headline inflation has dropped by 1.5 percentage points to 33.5 in February 2024 from 35 percent in the preceding month of January.

    The drop has been attributed to a decrease in food inflation.

    We may recall that the Reserve Bank of Malawi (RBM) predicted that inflation will begin to fall and reach the medium-term target of 5% in 2026 as a result of the tight monetary policy stance that Chakwera administration has adopted.

    According to RBM’s Director of Economic Policy and Research Kisu Simwaka, the bank adopted a plus or minus 2 inflation target, meaning the 5% is in between 3 and 7 percentage.

    “We have been in single digit inflation before and we will achieve the target in the medium term,” said the optimistic Simwaka.

    According to the International Monetary Fund (IMF), the stagnant growth, unsustainable debt, and the adverse effects of multiple shocks, including an outbreak of cholera and Cyclone Freddy in 2923, have compounded Malawi’s economic challenges.

    In view of the above-mentioned economic challenges, the IMF Executive Board recently approved a $175 million Extended Credit Facility (ECF) to support Malawi’s commitment to restore macroeconomic stability—that is, to create an environment of low or moderate inflation and a stable exchange rate. So far we are witnessing positive outcomes from implementation of these monetary policy reforms.

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