MSB sees inflation slow-down in May
MAY/14/2009

Malawi Savings Bank (MSB) says the national inflation rate is expected to further drop this month due to increased availability of food. In its Financial and Economic Report for April MSB says other contributors for the slow down would be low fuel prices and reduced transportation costs. The bank says oil prices would fluctuate erratically this month and that the recovery process of the global financial system would continue to be slow which would in turn continue to have adverse on global trade. "The global economy is expected to continue to suffer from the Impact of the recession and financial meltdown.

The economic slowdown will continue to affect aggregate demand for a number of products including oil," MSB says. Reuters News Agency reports that oil is now selling at below US$50 per barrel down from a record high of about US$147 per barrel registered last year. On the domestic front the bank says the national inflation rate is expected to slow down further benefiting from increased food availability, low fuel prices and low transport costs. "Interest rates and national inflation are expected to start declining in the immediate short term due to the tight monetary policy stance being pursued by the monetary authorities coupled by prudent and efficient fiscal policies being undertaken by government," the bank reports.

National Statistical Office indicates that in March this year the inflation rate was at 9.5 percent down by 0.2 percent. According to a recent survey by the Centre for Social Concern (CFSC) based in Lilongwe the average maize price in April went down by about 43 percent from K4,000 to K2,292 per bag of 50 kilogrammes. On the other hand the Reserve Bank of Malawi has maintained the current tight monetary with the bank rave at 15 percent and the Liquidity Reserve Requirement remaining al ,15.5 percent but most commercial banks have pegged their base lending rate at around 22 percent.

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