Inflation ends single-digit run

Headline inflation for the month of February jumped to 10 percent, up from 8.8 percent in January and the highest since June 2010, the Ghana Statistical Service (GSS) reported this week.


The current jump brings to a halt 32 consecutive months of single-digit inflation rates. The main reason behind the jump was the cut in fuel subsidies, which pushed pump prices up by 15-20 percent, but there were hikes across the board.

“All the key components recorded higher rates,” said acting Government Statistician Philomena Nyarko at a media conference in Accra.

“This has contributed to the increase in transportation costs and other associated services such as housing and gas, leading to the upsurge in inflation for the month under review.

“Food prices have also gone up since the country is in the planting season, driving up local food prices,” she said.

Dr. Nyarko explained that food inflation rose 1.4 percentage points to 5.3 percent, compared with 3.9 percent in January; while non-food inflation recorded 12.6 percent, compared with 11.5 percent recorded previously.

“Price drivers for food inflation were mineral water, soft drinks and juices at 15.7 percent; milk, cheese and eggs at 15.3 percent; coffee, tea and cocoa at 11.6 percent; and meat at 10.9 percent,” she added.

Price-drivers for non-food inflation were alcoholic beverages, tobacco and narcotics at 15 .9 percent; transport at 15.8 percent; and housing, water, electricity, gas and other utilities at 15.5 percent.

While the Northern Region recorded the highest regional inflation rate of 12 percent, the Western Region recorded the lowest at 7.4 percent.

Analysts have opined that the higher cost of fuel and food together with the budget deficit of 12.1 percent of GDP was a major contributing factor to the surge in inflation.

“This means more money has been injected into the system, thus taking its toll on inflationary trends,” said Collins Appiah of NDK Asset Management Limited.

“Government must reduce spending and be prudent in the way it spends; the more you spend, the more money that gets into the hands of people to go into the market to spend, causing an upsurge in money supply.”

Finance Minister Seth Terkper has assured that government will implement stringent measures to cut down its expenditure to reduce the fiscal deficit to 9 percent of GDP from the 12.1 percent gap recorded in 2012.

Government has been heavily criticised over the size of the deficit, which was almost twice the target of 6.7 percent.

Measures announced by Mr. Terkper to curb the gap include moving all government transaction and expenditures to a uniform platform for easier tracking, slowing down the initiation of new contracts as means of controlling expenditure, and bringing on board more of government’s liabilities onto its contracts database.