Malawi’s government has set an ambitious target to reduce annual inflation to below twenty-one percent this year, President Peter Mutharika said Friday, as the southern African nation struggles to stabilise its economy amid persistent fiscal and foreign exchange pressures.
Speaking in parliament, Mutharika said the donor-dependent country faces a challenging economic landscape, with inflation currently standing at twenty-six percent year-on-year. The high inflation has persisted since the middle of twenty-twenty-two, eroding household purchasing power, disrupting imports, and fueling public concern over the affordability of essential goods.
“The goal of my administration is to restore economic stability, bring down inflation below twenty-one percent, and lift growth,” Mutharika said. He outlined plans to revive Malawi’s economic growth to three point eight percent in twenty-twenty-six and four point nine percent in twenty-twenty-seven, up from the two point seven percent rate inherited by his administration following his return to power in a September election.
The government has struggled with crippling foreign exchange shortages, which have disrupted imports of fuel, fertiliser, and other key commodities. Officials warn that these shortages have contributed to the sustained high inflation and hampered business activity across the country.
Malawi’s economy remains heavily reliant on agriculture, which accounts for a large share of employment and GDP, and is vulnerable to climatic shocks. The aftermath of Cyclone Freddy in twenty-twenty-three, which destroyed homes and infrastructure in Blantyre and other southern regions, highlighted the economy’s sensitivity to natural disasters. The government has also faced difficulties in securing adequate financing to address these structural vulnerabilities.
To tackle these challenges, Mutharika said the government is negotiating a new support programme with the International Monetary Fund (IMF) while pursuing debt restructuring and efforts to boost dwindling international reserves. Foreign exchange reserves remain below the level widely recommended as a buffer against potential shocks, covering less than three months of imports, he noted.
Economists and international agencies have warned that without decisive fiscal and monetary measures, Malawi’s inflation could remain stubbornly high, particularly given global commodity price volatility and domestic supply constraints. The IMF has previously urged Malawi to expand its revenue base, improve tax collection, and reduce reliance on aid-dependent spending to create a more resilient fiscal framework.
The government’s focus on stabilising inflation is also linked to broader development objectives, including improving the business environment, supporting smallholder farmers, and stimulating industrial and service sector growth. By targeting a lower inflation rate, authorities aim to restore consumer confidence, encourage private sector investment, and maintain macroeconomic stability necessary for sustained growth.
Mutharika’s administration faces a delicate balancing act, seeking to protect vulnerable households from price shocks while implementing reforms to strengthen public finances and foreign exchange management. Experts say successful reduction of inflation below twenty-one percent would represent a significant turnaround for a country that has struggled with high inflation for nearly four years.
As Malawi embarks on this economic recalibration, international partners, domestic policymakers, and the private sector will be closely watching the government’s ability to implement measures that reduce inflation, expand fiscal space, and sustain economic recovery over the medium term.
Background to Malawi’s inflation
Malawi has been struggling with persistently high inflation since mid-2022, with rates consistently above twenty percent. By early 2026, annual inflation stood at twenty-six percent, driven by rising prices for fuel, fertiliser, food, and other essential goods. Contributing factors include foreign exchange shortages, heavy reliance on imported commodities, supply chain disruptions, and a narrow tax base that limits government revenue. The high inflation has eroded household purchasing power, increased the cost of living, and posed challenges for economic stability.
The Malawian government, under President Peter Mutharika, has set a target to reduce inflation below twenty-one percent in 2026. Efforts include negotiating support programs with the International Monetary Fund, restructuring debt, boosting foreign reserves, and stabilising the kwacha. The goal is to restore economic growth, which is projected to rise from two point seven percent in 2025 to three point eight percent in 2026 and four point nine percent in 2027, while protecting households from further price shocks.
Malawi’s inflation situation remains closely linked to broader economic vulnerabilities, including a heavy dependence on agriculture, exposure to climate shocks like cyclones, and limited domestic industrial capacity. Analysts highlight that achieving sustainable inflation control will require coordinated fiscal and monetary policies, improved foreign exchange management, and expanded domestic revenue mobilization.
