May inflation falls to 20.06 %

Headline inflation rate fell to 20.06 percent in May, down from 20.56 percent in April- the first drop in nine months, but still a five year high.

Falling prices of food items-namely milk, cheese and eggs as well as communication contributed largely to the current decline in the Consumer Price Index (CPI).

Professor Nicholas Nsowah-Nuamah, Deputy Government Statistician, briefing the media in Accra said: “The rate of inflation fell in May for the first time in 2009 since the rate started going up in October last year.

“Record high prices for oil and rising food prices pushed retail prices up last year sending inflation on an upward spiral.

“The trend observed in the first four months of 2009 is similar to that of the same period in 2008.

However, the slight decline in the rate in May 2009 is a deviation from the sharp rise observed in May 2008.”

Under normal circumstance the fall marks the beginning of the decline but last two-week’s Saturday hike of 30 percent in fuel prices leading to a 17 percent rise in transport fares which normally have direct effect on consumer spending makes the outlook for the coming months unclear.

This development makes the inflationary trend outlook unclear.

“We are unable to pronounce any prediction now because of the recent fuel price hikes, which normally have direct effect on consumer spending,' he said.

The non-food group, which constitutes 55.09 percent of the CPI, continues to exert its driving force on inflation.

In May 2009 the rate of inflation for non-food group was 22.2 percent as against 17.17 percent for the food groups. The corresponding figures for April 2009 were 21.46 and 19.32 percent for non-food and food respectively.

The country’s headline inflation rate has been on the upward trend since October 2007, confirming fears of government not meeting its macro-economic targets this year. Government has targeted an end-end-of –year inflation rate of 12.5 percent.