Energy
High fuel prices pushes inflation up
November 04, 2021 / Bester Kayaye
The Reserve Bank of Malawi’s Monetary Policy Committee (MPC) has projected that the rise in fuel prices on the domestic market will trigger a corresponding increase in the rate of inflation in 2022.
It is anticipated that the fourth quarter of 2021 will see the inflation rate shoot to 8.9percent from 8.2percent as a result of the fuel price adjustment as well as the rise in maize prices, persistent disruptions to global supply chains among other factors.
According to a statement signed by MPC chairperson Dr. Wilson Banda, the inflation rate averaged 8.7 percent in the third quarter of 2021 against a projection of 8.8 percent and lower than the 9.1 percent recorded in 2021.
“The decrease is attributed to moderation of the food inflation rate as non-food inflation rate increased marginally. Specifically, food inflation rate averaged 10.3 percent in the third quarter of 2021 compared to 11.1 percent the second quarter of 2021,” the statement says
“On the other hand, non-food inflation rate averaged 7.2 percent in the third quarter of 2021, from 7.1 percent in the previous quarter,” Banda says in the statement adding that headline inflation rate is now projected to average 9.1 percent in 2021, representing an upward revision of 0.3 percentage points from the third quarter of 2021.
He also explained that Malawi’s economy is rearing from the developments in international oil prices as crude oil prices rose to an average of US$73.0 per barrel in the third quarter of 2021 from US$68.6 per barrel in the second quarter.
Banda noted that the increase was propelled by the growing demand for the commodity following an economic recovery in the northern hemisphere and the global energy crunch.
“Brent crude oil prices are anticipated to remain around the current levels for the remainder of 2021 but are expected to decline to an annual average of US$66 per barrel in anticipation that growth in production from OPEC+, U.S. tight oil, and other non-OPEC countries will outpace consumption,” says the statement Meanwhile, the MPC has maintained the Policy Rate at 12.0 percent while the Lombard rate is at 0.2 percent points above the Policy Rate. The Liquidity Reserve Requirement (LRR) ratio on both local currency and foreign currency deposits remain at 3.75 percent in a bid to minimize policy trade-off and to better manage inflationary pressures as well as to support economic recovery
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The establishment of a stable and self-sustaining ecosystem, but not necessarily the one that existed before mining began. In many cases, complete restoration may be impossible, but successful remediation, reclamation, and rehabilitation can result in the timely establishment of a functional ecosystem.
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