Malawi is on course to achieve single digit inflation within the year as the rate keeps progressively climbing down.
A Consumer Price Index for May 2017 by the National Statistics Office shows the headline inflation has ticked down by 2.3 percent to 12. 3 percent for the month of May. It was at 14.6 percent for April.
At this point in 2016, the inflation rate was at 21.6 percent.
The urban and rural inflation rates stand at 10.3 percent and 13.8 percent respectively.
The overall food inflation has scaled down to 11.2 percent from 14.6 percent while non-food inflation is at 13.4 percent from 14.4 percent in April 2017.
What does this mean?
President Peter Mutharika’s administration has prioritised restoring health and confidence in the economy as a fundamental measure in fostering national development.
The declining of the inflation bodes well for the recovery process of the economy.
With inflation declining, it means Malawi is setting grounds for rise in employment. It also means consumers would have more money to buy goods and services which in turn benefit the economy.
High inflation rate leads to high cost of living, high cost of doing business and high cost of borrowing money for investment – all of which negatively affect the economy.
At the time Mutharika assumed power in May 2014, the inflation rate was at 23.7 percent and considered one of the highest in COMESA.
The President inherited an economy severely battered by theft of over K20 billion public money in the infamous Cashgate by the Joyce Banda government and the resultant withdrawal of budgetary financial support by the donors.
The poor health of the economy was made worse by the back-to-back natural disasters in form of devastating floods (in 2015) and severe drought (in 2016).
With prudent fiscal measures, Mutharika has managed to haul the economy back on to the path of recovery and growth –to the satisfaction of local economic experts and institutions such as the IMF, World Bank and London think-tank Economist Intelligence Unit.
During his State of the Nation Address in May, Mutharika said government will continue with fiscal measures and ensure single digits inflation by mid 2018.
Looking at the progress being made and all things being equal, it seems the single digit inflation goal is attainable before the end of the year.