Latest news with #inflation
BBC News
36 minutes ago
- Business
- BBC News
Malawi inflation: 'I tell my children not to play so we save money on soap'
Suzanna Kathumba, a domestic worker in Malawi, spends every day thinking of ways she can economise to make her salary of 80,000 kwacha ($46; £34) a month stretch to support her she wrings a wet cloth from a bucket of water in the living room and starts by wiping down the tables and chairs, she considers her latest ploy to save money."I've told my youngest children not to get too dirty when playing so we can save on soap," the 43-year-old told the BBC. "But it's hard because children are children, they want to play."For the past few months Ms Kathumba, a divorced mother of four working in the capital, Lilongwe, has been struggling to survive on her salary because of the surging prices of goods in the little financial support from her ex-husband, she is the sole earner for the household. Most of her money goes back to her four children, who live in their home town of Kasungu, around 130km (80 miles) north-west of capital. The two youngest children are still in school and two older ones are May, the annual inflation rate in Malawi was 27.7% - one of the highest in Africa - a decline from 29.2% in April."What is surprising is that salaries are staying the same, but the price of commodities keeps going up on a daily basis," Ms Kathumba said."The money finishes before it even comes. We're living a very hard life." A recent Ernst & Young report said that Malawi was one of the few countries in the world it considered to have what it called a "hyperinflationary economy" - along with Burundi, Sierra Leone, Sudan, Venezuela and Zimbabwe. This is when there is cumulative inflation over three years of around 100% or accounting firm said that according to the World Economic Outlook database, compiled by the International Monetary Fund (IMF), Malawi had a three-year cumulative rate of inflation of 116% as of December 2024 and it forecast three-year cumulative rates of inflation of 102% for 2025 and 66% for from the World Bank also shows that the country is one of the poorest in the world. It estimates that 70% of the southern African nation's population lives on less than $2.15 a current cost-of-living crisis has left many citizens, like Ms Kathumba, without any savings."I would be lying if I say that I save some money at the end of the month. I have absolutely nothing left," she said."I pay 50,000 kwacha [$29] in school fees each term. Then you need to buy exercise books, food, soap - all from the same small salary. Sugar [1kg] is now 4,500 kwacha [$3]." Economists put Malawi's current inflation problems partly down to the shortage of foreign money - known as "forex" - in the has often struggled with forex as the country imports much more than it exports."We are not exporting high-value products," Dr Bertha Bangara Chikadza, senior lecturer in macroeconomics at the University of Malawi and the president of the Economics Association of Malawi, told the BBC."We export products like maize, soya beans and sugar, but import expensive products such as fertilisers, medicine and furniture, so we need a huge amount of forex for this," she wanting to import goods say that when they apply to the banks for forex - in particular US dollars - they are often turned down because there is none forces some to look for US dollars on the black market, where the exchange rate is higher than the official rate of 1,750 kwacha for $ can pay between 4,000 and 5,000 kwacha for $1 - which has a knock-on effect for owners, like Mohammed Hanif Waka, who owns a stationery shop in the capital, says he has lost many customers since putting up prices."Sales have drastically dropped. We have had to make redundancies," he told the he would usually import items for his shop, like office supplies, pens and notepads, the lack of foreign exchange means he is now trying to access goods locally."I can't remember when our banks gave us forex," he for change, informal traders took to the streets to protest in February, hundreds blocking the entrance to Malawi's parliament."We are really affected, we are supposed to get a profit from our businesses," Steve Magombo, the chairman of Lilongwe's Tsoka Flea Market, told the BBC."But the way things are, we are failing. Malawians are failing to buy our commodities."Earlier this year it was announced that a loan agreement of $175m with the IMF had been suspended temporarily. The four-year loan was approved in November 2023, with $35m disbursed so far."Under IMF policy, if reviews are not completed over an 18-month period the programme automatically expires, and no reviews have been successfully completed," Justin Tyson, the IMF mission chief for Malawi, told the Tyson added that "fiscal discipline" had "proven difficult to maintain in the current environment due to elevated spending pressures". However, Malawi's Finance Minister Simplex Chithyola Banda said it was the government's decision to suspend the loan as there was a disagreement over terms."When you are told you need to build up reserves but at the same time the country is running dry because you don't have fuel - you choose to procure fuel [rather] than to build up reserves," Banda told the BBC's World Business Report last month."We were told in order to stay in the programme, you need to adjust prices of fuel, but that could have a negative impact on the prices of basic commodities."With Malawi's national elections scheduled for September, the government says it is taking a number of steps to bring prices Minister Vitumbiko Mumba has acknowledged that forex has to be rationed but says registered businesses can apply for essentials via the reserve bank or finance ministry. But he also blames traders for inflating prices."We are setting up an economic sabotage bill and there is also going to be an essential goods and services bill to regulate this," he told the the main opposition has laid the blame for inflation at the feet of those in the cause of inflating prices, the cost-of-living is likely to be a huge campaign hope their daily struggles will be eased by the government's plans - and everyone wants a solution that brings lasting stability to the economy."We depend on the government for assistance," said Ms Kathumba."I hope the politicians remember the less privileged Malawians when making their decisions."Additional reporting by Jack McBrams in Lilongwe. You may also be interested in: 'My bananas were seized and destroyed' - Malawi-Tanzania trade row escalatesHIV clinics shut in Malawi after USAID freeze Malawi seeks billions of dollars from US firm over ruby salesBanana wine brings sweet taste of success to Malawi farmers Go to for more news from the African us on Twitter @BBCAfrica, on Facebook at BBC Africa or on Instagram at bbcafrica
Yahoo
an hour ago
- Business
- Yahoo
Fed Chief Kashkari's 'Wait-and-See' on Rate Cuts
Minneapolis Fed chief Neel Kashkari still sees room for two rate cuts this yearmaybe kicking off around Septemberbut he's urging colleagues to stay nimble, since today's tariffs could fuel tomorrow's inflation. In a Friday essay, Kashkari admitted that inflation is inching back toward the Fed's 2% goal, yet he's worried that Trump's sweeping tariffs have injected fresh uncertainty. He's kept his call for two cuts in 2025 (first one tentatively in September), but he's clear: don't pencil in an easing path now only to discover later that higher import fees have bumped up consumer prices. Most Fed speakers this weekexcept Governors Waller and Bowmanhaven't even seriously entertained a July cut. Kashkari wants the focus on actual inflation and real economic data, not a pre-set calendar commitment. If tariffs stick around, businesses will likely pass those extra costs on to you and me. By staying data-driven, Kashkari hopes to avoid a policy misstep that could let inflation creep back in. Keep an eye on incoming CPI and PCE reportsand any fresh trade headlines. If the tariff saga deepens, Kashkari's call for flexibility could push rate cuts into late 2025or beyond. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Malay Mail
an hour ago
- Business
- Malay Mail
Trump slams US Fed chair Powell as ‘stubborn mule' after mild inflation rise and consumer spending dip
WASHINGTON, June 28 — The US Federal Reserve's preferred inflation measure logged a mild uptick yesterday while spending weakened, triggering another tirade by President Donald Trump against the central bank chair for not cutting interest rates sooner. 'We have a guy that's just a stubborn mule and a stupid person,' Trump told an event at the White House, referring to Fed Chair Jerome Powell. 'He's making a mistake.' With Powell's term as Fed chief coming to an end next year, Trump hinted at his choice of successor: 'I'm going to put somebody that wants to cut rates.' The president's remarks came after government data showed the personal consumption expenditures (PCE) price index climbing 2.3 percent last month from a year ago in May. This was in line with analyst expectations and a slight acceleration from April's 2.2 percent increase, but still a relatively mild uptick. Excluding the volatile food and energy sectors, the PCE price index was up 2.7 percent, rising from April's 2.6 percent uptick, the Commerce Department's report showed. But consumer spending declined, after Trump's fresh tariffs in April dragged on consumer sentiment. PCE dropped by 0.1 percent from the preceding month, reversing an earlier rise. While Trump has imposed sweeping tariffs on most US trading partners since returning to the White House in January — alongside higher rates on imports of steel, aluminium and autos — these have had a muted effect so far on inflation. This is in part because he held off or postponed some of his harshest salvos, while businesses are still running through inventory they stockpiled in anticipation of the levies. But central bank officials have not rushed to slash interest rates, saying they can afford to wait and learn more about the impact of Trump's recent duties. They expect to learn more about the tariffs' effects over the summer. 'Clear weakening' 'The experience of the limited range of tariffs introduced in 2018 suggests that pass-through to consumer prices is intense three-to-six months after their implementation,' warned economists Samuel Tombs and Oliver Allen of Pantheon Macroeconomics in a note. They flagged weakness in consumer spending, in part due to a pullback in autos after buyers rushed to get ahead of levies. And spending on services was tepid even after excluding volatile components, they said. 'There has also been a clear weakening in discretionary services spending, notably in travel and hospitality,' said Michael Pearce, deputy chief US economist at Oxford Economics, in a note. This reflects 'the chilling effect of the plunge in consumer sentiment,' he added. Between April and May, the PCE price index was up 0.1 percent, the Commerce Department report showed. As a July deadline approaches for higher tariff rates to kick in on dozens of economies, all eyes are also on whether countries can reach lasting trade deals with Washington to ease the effects of tariffs. For now, despite the slowing in economic growth, Pearce said risks that inflation could increase will keep the Fed on hold with interest rates 'until much later in the year.' — AFP
Yahoo
4 hours ago
- Business
- Yahoo
Nasdaq Hits Record While Bitcoin, Gold Remain Under Pressure After Latest Macro Data
Bitcoin BTC continues to consolidate in the $102,000 to $108,000 range and gold is lower by 2% today and roughly 7% from its record high. Meanwhile, the Nasdaq 100 has reached new all-time highs. A couple of U.S. macroeconomic data points Friday morning — though nearly two months old at this point — might have added to the modestly negative tone for BTC and gold. Personal income in May came in at -0.4%, falling short of the expected increase of 0.3%. Personal spending month over month printed at -0.1%, missing the forecast of a 0.1% increase. Maybe of more import to markets, the core PCE price index in the US, which excludes volatile food and energy prices and is the Federal Reserve's chosen gauge of underlying inflation, rose by 0.2% in May compared to expectations of a 0.1% increase. On a year-over-year basis, core PCE prices rose 2.7% versus 2.6% expected. This data further supports the view that the economy may be heading toward stagflation. Noted goldbug and no-coiner Peter Schiff: "Traders continue to sell gold even as this morning's release of weak economic data and stronger-than-expected inflation data pushed the dollar index to new lows. Stagflation and a tanking dollar are bullish for gold, regardless of any superficial trade deals 'negotiated' by Trump." Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
4 hours ago
- Business
- Yahoo
Ray Dalio shares 3 trades to weather a US debt spiral
Ray Dalio is worried about a looming financial crisis sparked by spiraling US debt levels. The US faces a $2 trillion deficit and $1 trillion in interest payments this year. Dalio advises hedging against inflation with TIPS, gold, and bitcoin. Famed investor Ray Dalio is ringing the alarm on America's growing mountain of debt. The Bridgewater Associates founder has been warning about unsustainable deficits, likening the situation to a looming "financial heart attack" in a recent discussion of his new book "How Countries Go Broke: The Big Cycle." "It's like a plaque building up in the arteries," Dalio said of debt service during an event in New York on Thursday. "You can see interest rates and debt service payments starting to squeeze out other consumption." This year, the US is on track to bring in revenues of around $5 trillion and spend $7 trillion, contributing $2 trillion to the national deficit, Dalio said. On top of that, interest payments to service the debt will come out to $1 trillion. "We have to, in the next, year sell about $12 trillion. We have $1 trillion that we can pay in interest. We have $9 trillion in debt service in terms of principle, and then we have to sell another $2 trillion because we had a deficit," Dalio said. In order to return to financial health, the US must lower its budget deficit from 6.5% to 3% of GDP through a combination of cutting spending, increasing tax revenue, and lowering interest rates, Dalio said. That puts the US in a tough spot because all three parts of the solution are difficult and controversial — just look at DOGE, the ongoing debate over the Big Beautiful Bill, and Trump's feud with Jerome Powell — making it extremely hard to move to an actionable outcome. And with the US at risk of a recession, the debt situation could become even more severe since government borrowing tends to increase in times of economic downturn, Dalio said. Mounting debt creates a supply and demand problem where the government has to raise interest rates to make US debt attractive to investors or print more money. "When faced with the choice, they print money," Dalio said of governments. Luckily, there are some actions investors can take to protect their portfolio from the negative effects of mounting national debt and widening deficits. The most important things one can do are to hedge portfolios against inflation and diversify holdings, Dalio believes. "Look at the value of your portfolio in inflation-adjusted terms, not in nominal terms," Dalio told the audience. Dalio's a big fan of Treasury Inflation-Protected Securities (TIPS), which are government bonds that return more when inflation is high. It's the best investment vehicle for a middle-class American who's risk-averse and looking for inflation protection, in his opinion. "The safest investment that you can get right now is an inflation-indexed bond," Dalio said. "You'll get a bit over 2% of real return above inflation." Gold is another one of Dalio's top picks. The yellow metal has been a time-tested store of value, and it's no different today. Gold provides diversification, inflation protection, and a hedge against geopolitical risks. It's typically negatively correlated to other investments, meaning that it can perform well in times of economic downturn. "There's a saying that gold is the only asset that you can have that's not somebody else's liability," Dalio said. "It's a prudent thing to have somewhere between 10 or 15% of your portfolio in gold." And finally, a little bit of bitcoin can also bolster your portfolio. Dalio has changed his mind on bitcoin over the years, initially calling it a speculative asset and eventually owning a small amount himself starting in 2021. Read the original article on Business Insider Sign in to access your portfolio
