The November 2025 inflation print for Malawi reached 29.10% YoY, up from 28.70% in October and above the 28.50% consensus forecast, according to the Sigmanomics database. This marks a steady rise from the 27.10% lows recorded in July 2025. The persistent inflationary trend reflects ongoing supply-side constraints and demand pressures amid a challenging macroeconomic environment.

Drivers this month

• Food prices contributed approximately 0.25 percentage points (pp) to inflation, driven by staple shortages.
• Energy costs added 0.15 pp, reflecting global oil price volatility.
• Transport and housing costs rose moderately, adding 0.10 pp combined.

Policy pulse

Inflation remains well above the central bank’s target range of 5-8%, prompting continued monetary tightening. The Reserve Bank of Malawi has maintained elevated policy rates since mid-2025, but transmission to inflation has been slow due to structural rigidities and fiscal pressures.

Market lens

Immediate reaction: The MWK depreciated 0.40% against the USD within the first hour post-release, while 2-year government bond yields rose by 15 basis points, signaling market concerns over persistent inflation risks.

Malawi’s inflation rate of 29.10% YoY is among the highest in Sub-Saharan Africa, reflecting both domestic and external pressures. Core macroeconomic indicators reveal a mixed picture: GDP growth is estimated at 3.20% for 2025, below historical averages, while unemployment remains elevated at 12.50%. The fiscal deficit widened to 6.80% of GDP in the first three quarters of 2025, exacerbating inflationary pressures.

Monetary Policy & Financial Conditions

The Reserve Bank of Malawi’s policy rate stands at 18.50%, up from 16.00% six months ago. Despite this, credit growth remains robust at 14% YoY, partly due to government borrowing. Inflation expectations remain unanchored, complicating the central bank’s mandate.

Fiscal Policy & Government Budget

Government spending increased by 9% YoY, driven by infrastructure projects and social programs. However, revenue collection lagged, resulting in a larger budget deficit financed by domestic debt issuance. This dynamic fuels inflation through increased money supply and demand-side pressures.

External Shocks & Geopolitical Risks

Regional instability and fluctuating commodity prices, especially maize and fuel, have intensified inflationary pressures. The MWK’s volatility against major currencies reflects external vulnerabilities, with imported inflation contributing roughly 4 pp to the headline rate.

The inflation trend chart highlights a steady climb since June 2025, with food and energy prices as primary contributors. Seasonal factors and supply chain disruptions have amplified volatility. The 12-month average inflation rate has increased by 1.30 pp compared to the previous year, underscoring a sustained inflationary environment.

Market lens

Immediate reaction: The MWK/USD exchange rate weakened by 0.40% post-release, while short-term yields climbed, reflecting market concerns about prolonged inflation. Breakeven inflation rates edged higher, indicating inflation expectations remain elevated.

Looking ahead, Malawi’s inflation trajectory depends on several factors. The central bank’s continued rate hikes may moderate demand, but supply-side constraints and fiscal deficits pose risks to disinflation. External shocks, including commodity price volatility and geopolitical tensions, could exacerbate inflationary pressures.

Bullish scenario (20% probability)

• Improved agricultural output and stable commodity prices reduce food inflation.
• Fiscal consolidation leads to lower deficits and reduced monetary financing.
• Inflation falls below 20% by mid-2026, restoring purchasing power.

Base scenario (55% probability)

• Inflation remains elevated around 25-30% through 2026.
• Monetary policy tightens gradually but with limited impact on core inflation.
• Currency remains volatile but stabilizes with external support.

Bearish scenario (25% probability)

• External shocks worsen, pushing inflation above 35%.
• Fiscal deficits widen, fueling monetary expansion and currency depreciation.
• Inflation expectations become unanchored, leading to wage-price spirals.

Malawi’s inflation rate of 29.10% YoY in November 2025 highlights persistent macroeconomic challenges. While monetary tightening is underway, structural factors and fiscal imbalances limit its effectiveness. External shocks and geopolitical risks add uncertainty, requiring coordinated policy responses. Financial markets have priced in some risks, but inflation expectations remain elevated. Policymakers must balance growth and price stability to avoid long-term economic damage.

Key Markets Likely to React to Inflation Rate YoY

Malawi’s inflation data significantly impacts local currency and government bonds, while also influencing regional commodity markets and forex pairs. Monitoring these markets provides insight into inflation expectations and policy effectiveness.

• MWKUSD – Directly reflects inflation-driven currency pressure.
• MWSE – Malawi Stock Exchange reacts to inflation and policy shifts.
• ZARMWK – Regional currency pair sensitive to inflation and trade flows.
• BTCUSD – Crypto as an inflation hedge in emerging markets.
• AGL – Agricultural sector stock, linked to food price inflation.

FAQ

What is the current inflation rate YoY for Malawi?

The latest inflation rate for Malawi is 29.10% year-over-year as of November 2025.

How does Malawi’s inflation compare historically?

Inflation has risen steadily from 27.10% in July 2025 to 29.10% in November, marking a significant increase over the past year.

What are the main factors driving inflation in Malawi?

Key drivers include rising food and energy prices, fiscal deficits, currency depreciation, and external commodity shocks.

Takeaway: Malawi’s inflation remains elevated and volatile, requiring sustained policy efforts to restore stability and support economic growth.