Malawi’s inflation fall masks a deeper crisis, RBM Deputy Governor warns

By Iommie Chiwalo

Malawi’s inflation has fallen for ten straight months from 29.1 percent in October last year to 19.4 percent in September 2026, but this apparent good news hides a more troubling reality that leaves the country as a regional outlier, according to an analysis by Reserve Bank of Malawi Deputy Governor responsible for operations, Dr. Kisu Simwaka.

Simwaka argues that the headline decline is driven almost entirely by seasonal food prices and not by a fundamental restoration of price stability.

Writing on his official Facebook page where his followers commends him for coming out with a well balanced analysis, Simwaka says more telling indicator, is non-food inflation which remains stubbornly high at 31.5 percent, more than 26 percentage points above the Reserve Bank’s medium-term target of five percent.

“For a central banker, that gap is not just a statistic. It is a measure of credibility in the sense that when non-food inflation stays that high, it signals that households, firms and traders do not believe inflation is under control, and they continue to raise prices, wages and service charges in anticipation of further increases,” writes Simwaka.

Domestic inflation| Source: RBM

The analysis places Malawi in sharp contrast with its neighbours, many of whom have endured difficult reforms to bring inflation to single digits.

Simwaka points to what he calls the disciplined group by mentioning Zimbabwe which was once synonymous with hyperinflation but is now at 3.7 percent, nearly 16 percentage points below Malawi, after decisively fixing fiscal dominance.

“Zambia at 6.1 percent and Mozambique at 6.3 percent achieved their turnaround by stopping the practice of financing government deficits through the central bank. Tanzania at 4.3 percent and South Africa at 4.4 percent have remained stable within their targets, while Botswana, Burundi and Angola are all maintaining a steady downward trend below eight and a half percent,” he writes.

Countries with the Highest Inflation Rates (percent) in the selected Sub-Saharan African countries in July 2026| Source: RBM

Adding that there is also a cautionary group whereby inflation is creeping back because policy was loosened prematurely.

“For example Uganda, Ghana and Namibia, all at between 4.6 and 5.4 percent, are now seeing upward pressure after early rate cuts, while Kenya has recorded three consecutive months of rising prices to 6.8 percent on the back of food and fuel pressures. The lesson for Malawi is that premature loosening erodes hard-won credibility and invites inflation back,”

Malawi currently finds itself uncomfortably close to Rwanda, where inflation has risen for six months to 20 percent, and well above Nigeria which has managed to bring inflation down from 20.9 percent a year ago to 14.6 percent by maintaining a strict policy stance.

The road ahead, according to the analysis, will be a severe weather test. While baseline forecasts suggest Malawi’s headline inflation could ease to between 17 and 19 percent by December supported by the recent harvest, weather experts are projecting lower than normal rainfall from October 2026 to March 2027.

The difference in resilience is stark. For instance in Zambia and Mozambique have built strong foreign currency reserves and strategic grain buffers, meaning a drought would cause only a minor and manageable uptick in their prices but currently, Malawi with less than three months of import cover and low grain reserves, has no such cushion.

Simwaka warns that a drought-induced shortage of food and hydro-generated electricity could easily push inflation back into the 23 to 25 percent range by early next year.

He insists that laws of economics cannot be bypassed since there is no shortcut to stability hence advisable for Reserve Bank and the Ministry of Finance to maintain a restrictive monetary stance of which it is advisable that government must stop relying on the central bank to finance its budget, and that the country must urgently pursue structural reforms to secure reliable food and electricity supply.

Meanwhile in its weekly update, Bridgepath Financial Market Advisory, says Malawi has done commendable work to bring inflation down from its peak, but at 19.4 percent it remains too high when neighbours like Tanzania, Zambia and Angola have proven that single-digit inflation is achievable.

But Simwaka argues that staying in the course is the only way to make the five percent target a reality.