The World Bank has warned that Malawi faces renewed inflationary and foreign exchange pressures due to a projected 23 percent increase in global commodity prices this year. This surge is driven by escalating geopolitical conflicts and adverse weather conditions. The World Bank's October 2026 Commodity Markets Outlook forecasts a 32 percent rise in energy prices and a 10 percent rise in food commodity prices.
According to Scotland-based Malawian economist Veli Nyirongo, rising global oil prices pose an immediate threat to Malawi because of the country's dependence on imported petroleum products. Malawi imports most of its petroleum products, so any disruption to global oil supply or rise in prices directly increases domestic inflation, transport costs, and production expenses.
Nyirongo also noted that higher fuel costs spread across agriculture, manufacturing, and distribution, increases import expenditure and demand for scarce foreign exchange. This could undermine Malawi's efforts to control inflation. The Reserve Bank of Malawi (RBM) has acknowledged persistent imported inflation despite recent improvements in headline inflation.
In its October 28 Monetary Policy Committee (MPC) Statement, the central bank reported that the inflation rate declined to 20.1 percent in the third quarter from 22.9 percent in the preceding quarter, largely reflecting improved food availability. However, non-food inflation remained elevated at 31.9 percent.
The central bank has maintained its 2026 annual inflation projection at 22 percent, down from 28.4 percent in 2025. However, RBM has revised its 2027 inflation forecast upwards to 20 percent from 18.5 percent, citing geopolitical tensions and the increased likelihood of El Niño conditions.
Centre for Agricultural Research and Development research fellow Patrick Chimseu cautioned that persistent non-food inflation can reverse declining food inflation through higher production and distribution costs. Chimseu cited research showing that fertiliser prices increased from below K50 000 per 50 kilogramme (kg) bag to about K180 000 per 50kg bag over four growing seasons.
The World Bank's baseline forecasts assume no major escalation of conflicts affecting global commodity supplies. The bank's warning comes as the RBM maintained the policy rate at 24 percent while raising the Lombard rate to 26 percent to strengthen liquidity management.
Key points
- Malawi faces renewed inflationary pressures due to a projected 23 percent increase in global commodity prices.
- The World Bank forecasts a 32 percent rise in energy prices and a 10 percent rise in food commodity prices.
- Rising global oil prices pose an immediate threat to Malawi due to its dependence on imported petroleum products.
