Inflation moves upward

The rate of inflation moves upward from the government’s end year target of single digit to peg at 11.4 per cent in June.

Inflation has been on the rise since January 2013 recording a rate of 10. 1 per cent and has continued steadily for six conservative months to its current stand of 11.4 per cent.

The current rate is also the highest since June 2010 despite the Minister of Finance Mr Seth Terkper’s assurance in the 2013 budget statement and economic policy of the government that inflation was expected to remain in single digit in 2013, in spite of fiscal challenges and risks that confronted the economy.

According to him, strong monetary policy stance is expected to be maintained to ensure the stability of the cedi and support the single digit inflation target.

The cedi has however fared relatively well  in recent times as compared to the US dollar, although the Ghana Statistical Service (GSS) reports that the Cedi depreciated by about 1.45 per cent compared to the dollar in April 2013.

Unlike the usual trend of the non-food basket contributing largely to the increase of inflation, in June a combination of the increase in the pressures of the food and non-food basket used in the computation of inflation pushed the figure.

The year -on-year non-food inflation rate was 14.0 per cent compared to 13.7 per cent recorded in May 2013 with the main drivers being, “housing, water, electricity, gas and other utilities (18.9%), education (18.1%), clothing and footwear (16.0%), and hotels, cafes and restaurants with (14.8%). Inflation was lowest in the communications subgroup with 0.4 per cent.

Meanwhile, the year-on-year food inflation rate was 6.4 per cent, 0.4 percentage points higher than the 6.0 per cent recorded in May 2013 largely due to oil and fats (11.7 per cent), sugar, jam, honey, syrups, chocolate and confectionary (10.9 per cent) and milk, cheese and eggs (10.8 per cent), and the fruits subgroup recorded the lowest rate of -0.1 per cent.

At the regional level, the Greater Accra Region recorded the highest year-on-year inflation rate of 13.3 per cent, followed by Ashanti Region with 11.2 per cent while the Brong Ahafo Region recorded the least rate 9.7 per cent.

Meanwhile, the GSS has launched the rebased index for computing inflation figures. The rebasing was done to reflect the consumption patterns change over time in response to a change in products and/or incomes of households.

According to Acting Government Statistician, Dr Philomena Nyarko, re-basing is done every five years or at any time when the spending pattern of consumers is observed to have changed and these are mostly the appropriate time to revise the CPI basket adding this was the fifth time the CPI has been rebased in Ghana.