The sustained increase in maize prices on the local market is a threat to inflation outlook, commentators have said.

Maize prices, according to a latest report by the International Food Policy Research Institute (Ifpri), have continued to rise and in December 2021 rose by four percent.

In an interview yesterday, economic statistician Alick Nyasulu said the development puts the monetary authorities in a delicate situation.

He said: “The whole agriculture outlook appears quite uncertain. Other than this, the weather does not look good and the cost of farm inputs has gone up rapidly.

“The fears of an inflation spike are thus founded.”

Consumers Association of Malawi executive director John Kapito observed that the price surge is a threat to consumers given the significance of maize in the country’s Consumer Price Index (CPI).

He said: “We noted that maize price indeed rose in December, but we are optimistic prices will go down as we approach the harvest season.

“Any rise in maize prices comes as a blow because this ultimately pushes up prices of everything. We are thus hopeful for constant prices as we go into the harvest season otherwise we are in trouble.” 

Maize, as part of the food component, has a huge weight at 45.2 percent in the CPI, which is an aggregate basket of goods and services for computing inflation.

The Ifpri’s  maize outlook and supply update shows that maize prices in most markets were recorded at K200 per kilogramme (kg) and recorded sharp increase in December last year when compared to the same period the previous year.

Meanwhile, Malawi’s annual rate of inflation has been rising  largely due to rising food and non-food inflation.

National Statistical Office figures show that Malawi’s year-on-year headline inflation rate for November 2021 rose by 1.3 percentage points to hit 11.1 percent.

The figures show that during the same period the previous year, inflation rate was recorded at 7.3 percent, which means prices of goods and services during the period under review increased at a faster rate.

Reserve Bank of Malawi Governor Wilson Banda in the fourth Monetary Policy Committee Statement  said inflationary pressures were mounting, but added that the sources of pressure were exogenous and mostly supply-side factors.

The post Maize price rise threat to inflation, say analysts appeared first on The Nation Online.