It is also pleasing to note that the rate of inflation has been declining since February 2006. By December 2006, the annual rate of inflation declined to 13.6 % from 17.1% realised in 2005. This was mainly due to: •  slowdown in food inflation as a result of a good crop. •  relative stability of the Malawi kwacha against other major currencies.
•  lagged effects of a decline in money supply observed earlier in the year. On the external sector, it is pleasing to note that foreign exchange reserves have been building up rapidly since the attainment of the HIPC Completion Point in August 2006.