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| Business |
| Maize pushes inflation higher |
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by
Ephraim Munthali, 21 July 2004
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18:00:40
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The shortage of maize continues to accelerate Malawi’s year-on-year inflation, standing at 11.6 percent in June from 11.3 percent in May.
The National Statistical Office (NSO) said Monday the corresponding urban and rural areas were 13 percent and 10.9 percent respectively.
The Office said the national month on month food index from May to June fell 6.7 percent, slightly lower than the seven percent slump recorded during the same period last year.
NSO said although the trend in the food index has been declining, the low maize supply forced the upward movement in the overall inflation rate.
The staple food crop accounts for 58 percent of the consumer price index.
The Ministry of Agriculture, Irrigation and Food Security estimates that the country has a maize shortage of 600,000 metric tonnes.
A World Food Programme (WFP) study reveals that more than one million Malawians face starvation this year.
To fill the maize gap, President Bingu wa Mutharika told Parliament in Lilongwe last month that government would buy at least 160,000 metric tonnes of maize locally and from neighbouring countries.
Maize imports could swallow a major portion of foreign exchange reserves which the Reserve Bank has already described as very low.
And insufficient forex reserves could further weaken the kwacha’s value, resulting in high money supply—an inflation vicious cycle.
Again, with the Reserve Bank’s sudden decision to relax its tight monetary stance by cutting interest rates before seeing results from the recently announced fiscal measures, governor Elias Ngalande may need to buy more mops than just his RBM Bills.
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