No End in Sight as Inflation Rate Climbs Again

The rate of inflation climbed up once more in July for the fourteenth consecutive time worsening the purchasing power of consumers at a time when the local economy continues to grapple with a currency on a free fall, fiscal slippages, and mounting public debt stock, among others. The inflation rate rose from 29.8% in June to print at 31.7% in July, the worst since November 2003. This represents a 22.7 percentage points gain in the rate recorded over the same period last year. The rate of increase in the inflation numbers has however slowed over the past three months.

The strong and sustained pick-up in the inflation rate has widely come on the back of an upsurge in the prices of imported items amidst a struggling currency and increase in import bills following continuous increases in crude oil prices on the international market. Data from Ghana Statistical Service has revealed that for the fourth time running, inflation on imported items surpassed that on local goods with four of the top five items in the inflation basket being imported products.

Food inflation picked up steam in July after recording a modest month-on-month figure at 2.3% in June. In July, month-on-month food inflation came in at 3.3%, with the annual rate at 32.3%, having risen from 30.7% in June. Food inflation in July was driven by Oils & Fats at 67.0%, Fish and other Sea-foods at 42.9% and Water at 42.4%.

Month-on-month non-food and alcoholic beverages recorded its lowest inflation rate since February at 3.0%, easing down from a peak of 4.6% in April. Annual non-food inflation rate printed at 31.3% in July, up from 29.1% in June. Significant drivers of non-food inflation included Transport at 44.6% and Housing, water, electricity & other fuels at 43.0%.

At the regional level, the inflation rate hovered between 19.8% in the Upper East region and 38.1% in the Eastern region. Inflation on both local and imported items recorded increases from 29.2% and 31.3% in June to 30.9% and 33.9% in July respectively.

The last Monetary Policy Committee meeting took a surprise turn as the committee adopted a wait-and-see approach following a deceleration in the rate of increase in June’s inflation reading. The committee will however be expected to resume tightening the policy rate if the upward pressures on consumer prices persists in August.