Malawi revises 2008 inflation forecast upwards to 8.5 pct

LILONGWE (Reuters) - Malawi's Finance Minister Goodall Gondwe on Wednesday revised the year-end inflation rate forecast to 8.5 percent, up from the 6.5 percent predicted in his budget statement earlier this year, citing higher global oil prices.

But Gondwe said the economic growth forecast for fiscal 2008/09 remained at 7 percent, while the outlook for interest rates was also unchanged.

"Because of large international oil price increases, it is now projected that in Malawi's circumstances, we would end the year with an inflation rate of about 8.5 percent instead of 6.5 percent that was projected earlier," Gondwe told parliament.

But inflation should head lower in late 2009, and could end that year at 7 percent, he added.

Rising food and fuel prices pushed inflation up to 8.5 percent year-on-year in June, from 7.9 percent previously, the National Statistical Office said last month.

The southern African nation relies on agriculture, primarily tobacco, for its foreign earnings and is dependent on imported oil and gas.