Ghana's producer inflation drops, but still high

Annual producer inflation dropped marginally to 23.80 per cent in May from 24.29 percent in the previous month, the Ghana Statistical Service (GSS) said.

On a month-on-month basis, producer prices rose 0.74 per cent during the month of May, after increasing by 0.63 percent in April.

Despite the drop in annual producer inflation, the rate remains high and suggests industry costs are pacing quite rapidly on a year-on-year basis, with implications for the price-competitiveness of the sector’s output.

On specific industry basis, mining and quarrying inflation declined to 32.6 per cent, down from 37.07 per cent in April. Manufacturing, which contributes more than two-thirds to total industry, saw its inflation rise to 12.42 per cent from 12.22 per cent in April.

Dr. Grace Bediako, Government Statistician, at a media conference in Accra, said the highest year-on-year price change of 71.84 per cent was recorded in the utilities sector, and this has remained unchanged since June 2010.

She indicated that seven out of the 16 major groups in the manufacturing sector recorded inflation rates higher than the manufacturing sector average of 12.42 percent. Manufacturing of papers and paper products recorded the highest inflation rate of 36.41 percent, while manufacture of fabricated metals recorded a negative change rate.

Between October 2009 and December 2009, producer inflation in the manufacture of petroleum products recorded a sharp increase.

Inflation in this industry stabilised for the first two months of 2010, but dropped between March and June 2010.The rate declined in November 2010 after increasing slightly in October 2010.

In January 2011, inflation in the petroleum industry jumped, but since February 2011 the rate has remained stable, recording 26.64 last month.

During the 12-month period from May 2010 to May 2011, producer inflation recorded its highest rate in April this year. Within this period, the rate went up slightly between May and June 2010.

Thereafter, the rate went quite stable until November 2010. From December 2010 to April this year, the rate has been rising steadily, making the May figure the rate’s first dip in a five-month period.

Last month, the Association of Ghana Industries (AGI) said its members continued to face high input costs, taxes and interest rates, ranking them as the top-three challenges to their businesses.

Manufacturers also cited high utility rates as a factor restricting the growth of their enterprises.

But if the initial dip in producer inflation triggers a reverse-trend in the coming months, industry may breathe a respite and ultimately pass on the savings to consumers.