(NYASATIMES) Malawi bank says inflation rate to quicken up further

Malawi bank says inflation rate to quicken up further
Alinafe Mtawanga
10 January, 2009 01:14:00

Food costs will sharply rise due to high fuel prices in Malawi amidst global price cuts

As pressure mounts on President Bingu wa Mutharika’s administration to cut fuel prices, Malawi Savings Bank (MSB’s) December 2008 financial and economic report has projected that the inflation rate is to increase further in January 2009 as a result of high fuel and food prices on the domestic front.

According to economic experts the development means prices of goods will continue rising.

“However the pressure on domestic prices is likely to ease after March 2009 attributable to the forthcoming crop harvesting season.” says the report, released on January 8.

According to the report the national inflation rate increased for a good part of 2008 when compared to 2007 where the rate was on a declining trend.

The report says the inflation rate for November 2008 increased further to 9.6 percent from 9.4 percent registered in October.

“Foods inflation registered an annual growth of 7.6 percent compared to 6.7 percent in November 2007, on the other hand, non food inflation recorded an annual increase of 11.9 percent.”

“ Inflation for the urban sector marginally increased to 11.8 percent from 11.7 percent while that for the rural areas increased to 8.4 percent from 8.2 percent registered in October 2008,” adds the report.

However the report says the Interest rates are expected to remain stable in the short term owing to the maintenance of tight monetary policy by authorities.

“The pressure on the MK/US$ exchange rate is likely to weaken in the short term following the expected easing of demand of foreign exchange for the importation of fuel, which has registered a significant decline in prices on the international market, “says the report.

According to MSB, inflows from the international community are also expected to boost the supply of foreign exchange during the period between now and the next tobacco-marketing season somewhere in march 2009.

“These factors will, to some extent, mitigate possible depreciation of the local currency.”

A number of non-governmental organizations have been calling on government to cut fuel prices following the global drop in fuel prizes.

Recently one of Malawi’s economic experts Mabvuto Bamusi, the former executive director of Malawi Economic Justice MEJN told the media that government is lacking what he termed “economic justice” on fuel prices.