Inflation slips further from target

Headline inflation slipped further away from the Central Bank’s core target in May, rising to 10.9 percent from 10.6 percent in April, the Ghana Statistical Service (GSS) said this week.

 

The jump in the rate, which is the highest since April 2010, was attributed to the continued effect of petroleum subsidies removal and the rising price of imports due to the weak cedi. The Bank of Ghana has said it is targetting an end-year inflation figure of 9 percent.

“The removal of fuel subsidies and the rise in the prices of imported items are still having an effect on the economy,” Government Statistician Dr. Philomena Nyarko said at a media conference in Accra.

 

She explained that food inflation for the month was 6 percent, down from 6.4 percent in April while non-food inflation accelerated from 13 percent to 13.7 percent. 

 “We are in the planting season and there is a shortage of food, which contributed to the upward inflation figure of 10.9 percent,” she said. 

The price drivers of non-food inflation were education (19.6 percent); clothing and footwear (16.8 percent); housing, water, electricity, gas and other utilities (16.6 percent); and miscellaneous goods and services (16.4 percent).

On the other hand, the main drivers of food inflation were sugar, jam, honey, syrups, chocolate and confectionery (10.5 percent); coffee, tea and cocoa (9.9 percent); mineral water, soft drinks and juices (9 percent); and oil and fats (8.5 percent).

“With the likelihood that further reforms will see utility subsidies lifted, and with the cedi remaining under pressure in the interim, inflation in Ghana is clearly on an uptrend,” said Razia Khan, Head of Africa Research for Standard Chartered Bank in London. “The Bank of Ghana was right to have raised the prime rate in May,” she added. 

The Central Bank raised its key lending rate by one percentage point to 16 percent in May, citing potential inflation risks from the weakening cedi and emerging fiscal challenges. 

The cedi weakened 1.2 percent against the dollar in May, the fourth straight month of depreciation, according to Bloomberg data. 

At the regional level, the year-on-year inflation rate ranged from 9.5 percent in the Brong Ahafo Region to 12.6 percent in the Greater Accra Region.

Three regions -- Greater Accra, Ashanti and Volta -- recorded inflation rates above the national average of 10.9 percent.