Central Bank targets 5% inflation for December

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The Reserve Bank of Malawi (RBM) has projected a five percent inflation target for December 2018.

18
January


RBM Spokesperson Mbame Ngwira was speaking in view of growing down of inflation by 0.6 percent to 7.1 percent for December 2017 from 7.7 percent as of November 2017.


Ngwira said the downward trend of inflation which has been necessitated by stable fuel prices, tight monetary policy and a tight fiscal stance that has seen government spending within its budget will continue this year.


Malawi started registering single digit inflation in August 2017 when the rate ticked down to 9.3 percent from 10.3 percent.


That achievement came 6 years from the last time Malawi economy chalked single digit inflation during late Bingu wa Mutharika’s time.


From August 2017, the rate has kept slowing down every month, defying some analysts who predicted that the inflation would not stay single digit as Malawi entered lean period.


Between September and February, inflation tends to rise due to a number of factors. Tobacco sales will have closed, food supply reduces and spending on agriculture inputs commences.


However the economy is proving it is no longer seasonal as it is weathering the lean season confidently.


That the single digit was attained last year was even remarkable as economic analysts had earlier forecast that Malawi could only register single digit inflation mid this year.


At the time President Peter Mutharika took over government in May 2014, inflation was around 24 percent and it was one of the highest in COMESA region.


Already battered by Joyce Banda’s Cashgate, the economy suffered further from devastating floods in 2015 and then severe drought in 2016.


The two natural disasters affected agriculture, the mainstay of Malawi’s economy.


But government remained steadfast on its sound economic management policies which have helped to tame inflation.


With the help of a good harvest last season, the raft of prudent financial management measures introduced and implemented by the Mutharika administration have restored confidence in the economy.


The economy is now on the path of recovery, experts agree.


The continued downward trend in inflation means prices of goods for consumers will remain stable.


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.

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