Malawi’s headline inflation has eased over 12 months, but oil volatility keeps the Reserve Bank of Malawi cautious on policy.
A cooling inflation line is welcome, but Malawi’s latest 12-month inflation review comes with a warning: the gains are still fragile.
Headline inflation has eased gradually, falling from a high of 30.5% in March 2025 to 23.8% by March 2026, according to Misryoum.. The direction is encouraging, but the reduction has not moved smoothly, reflecting how sensitive price dynamics remain to outside forces, especially changes in global oil prices.
Over the past year, inflation moved through three distinct phases.. From March to June 2025, inflation declined steadily, supported by easing food prices and base effects.. That momentum faded later, with inflation edging up again and peaking around 29.1% in October as pressure from global oil markets fed into domestic costs.
The review also points to a stronger disinflation trend entering the final part of the period, with inflation dropping from 27.9% in November to 23.8% by March 2026.. Misryoum notes this shift as oil-related disruptions from earlier months gradually dissipating, while tighter monetary conditions begin to play a role in anchoring expectations.
In this context, the key detail is the balance between progress and exposure. Even when inflation falls, Malawi’s import dependence and foreign exchange constraints mean that external shocks can quickly reshape the inflation outlook.
The structure of inflation is also changing.. Food inflation has moderated, but non-food inflation remains elevated, driven by fuel, transport, and utilities.. That mix suggests cost-push pressures, particularly imported inflation, are increasingly shaping the headline figure rather than domestic supply constraints alone.
Because of that, Misryoum says the Reserve Bank of Malawi is likely to keep policy cautious. With the policy rate currently at 24%, the expectation is a wait-and-see stance that prioritises stability while monitoring developments in global energy markets and foreign exchange conditions.
A premature easing, the review warns, could set off renewed inflation pressures if oil prices spike again or if the currency weakens. That is why the near-term focus is on letting the disinflation trend consolidate, even if financial conditions remain restrictive.
Meanwhile, the report highlights that commercial lending rates are likely to stay elevated for longer, influenced by tight monetary settings and risk premia in the economy. Even if inflation is moving in the right direction, broader financial conditions may not loosen quickly.
This matters for households and businesses because policy caution can translate into slower improvement in borrowing costs, even as price growth cools.. At the end of the day, Misryoum frames the story as progress with vulnerability, with oil volatility remaining the central test for how quickly policy can change.