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| Business |
| Stockbrokers see single-digit inflation in 2007 |
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by
Aubrey Mchulu, 01 June 2006
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06:39:07
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Stockbrokers Malawi Limited (SML) has forecast a single-digit inflation averaging about 9.8 percent next year.
Giving an ‘Investment Case’ in an Equity Research Report on the listing of First Merchant Bank Limited, SML further forecasts that this year inflation will average 12.3 percelargely thanks to reduced food costs.
The National Statistical Office (NSO) reported in May that the year-on-year national inflation had dropped from 16.6 percent in March this year to 16.1 percent in April.
In its report, SML says inflation is expected to decelerate further.
“In the current year, inflation is anticipated to decelerate further due to the lower food costs and the likely return of external support to ease government borrowings on the local market,” says SML.
Last year, national year-on-year inflation averaged 15.4 percent after opening the year at 14 percent in January before rising to 17.2 percent in December.
The rise in inflation was mainly on account of rising food costs mostly maize which accounts for 58.1 percent of the food basket, the Consumer Price Index.
Late last year and early this year the country was faced by a food shortage that made about 4.7 million in need of relief food.
The country saw inflation figures shooting up owing to hunger that affected 4.7 million people, resulting from crop failure in the 2004/05 growing season due to a prolonged dry spell.
But this year, coupled with a universal fertilizer subsidy, the country has registered a 200,000 metric tonnes maize surplus over the national grain requirement of 2.1 million metric tonnes.
SML further notes that the Reserve Bank of Malawi (RBM) and the Ministry of Finance have indicated continued commitment to fiscal and monetary policy discipline to check increased inflation.
In the forthcoming growing season, government has indicated it will again provide a fertilizer subsidy programme which, given good rainfall, should mean another better yield hence SML’s forecast could indeed become a reality next year.
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