The Consumers Association of Malawi (Cama) has urged households to exercise restraint when spending, warning that high inflation and borrowing costs have created a volatile market environment that could leave consumers financially exposed in the New Year. Cama executive director John Kapito said in an interview yesterday that the current economic conditions offer little room for discretionary spending, cautioning that households that overspent during the festive season risk facing severe financial strain once January obligations set in. He said: “The cost of living is high.
There is no room for anybody to spend freely. “This is not the time to pretend you have money. The market is not fair and it will not treat you well.” Cama’s warning comes against a challenging macroeconomic backdrop, with inflation hovering at around 27.9 percent, having remained above 25 percent for most of the year, eroding household purchasing power.
At the same time, the Reserve Bank of Malawi (RBM) has maintained the policy rate, the rate at which commercial banks borrow from the central bank, at 26 percent to tame inflation, pushing commercial borrowing rates for consumers to between 34 and 36 percent particularly for risky borrowers and small and medium enterprises. Economists say the combination of high prices and tight monetary conditions has turned what is traditionally a period of heightened consumption into a season of caution. Mzuzu University economics lecturer Christopher Mbukwa said inflation has sharply weakened real incomes, forcing households to prioritise essentials over discretionary purchases.
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He said: “Heightened inflation levels affect the purchasing power of consumers. “Over this festive season, consumers are prioritising inputs and their children’s school fees over usual commodities and services.” Mbukwa said reduced festive season spending reflects broader structural weaknesses in the economy, including sluggish business performance, weak consumer confidence and stagnant wages. Despite the subdued mood, he said prospects for 2026 could improve if inflation eases and economic growth begins to pick up.
The pressure is increasingly visible in the retail sector, particularly among import-dependent businesses. From a consumer-welfare perspective, Centre for Social Concern (CfSC) says the subdued festive season signals deeper anxiety about income security and future economic conditions, rather than a temporary seasonal adjustment.
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