Rising utility prices push up producer inflation

Continuously surging utility prices have pushed the producer price index up to a record high of 48.3%, the highest rate ever during a 12-month period.

 

This represents a 1.1 percentage point increase in producer inflation relative to the 47.2 percent rate recorded in July 2014.

The producer inflation in the utility sub-sector recorded the highest year-on-year producer price inflation rate of 75.8 percent over the July figure of 78.6 percent.

The trend of rising utility prices has a drastic impact on the cost of living for households in the country.

In October 2013, government announced major hikes in electricity and water tariffs after more than a year of subsidies. 

The hikes were followed by increases in January and July, causing power and water tariffs to jump by 96 percent and 72 percent respectively over nine months.

Dr. Philomena Nyarko, Government Statistician, confirming the figures at a media briefing to announce the August 2014 producer price index in Accra, said the utility sub-sector recorded the highest figure in price inflation rate at 75.8 percent.

This was followed by the mining and quarrying sub-sector with 50.7 percent while the manufacturing sub-sector recorded inflation of 41.9 percent.

The month-on-month change in producer price index from July 2014 to August 2014 was 1.7 percent.

Monthly changes in the producer price index indicated the manufacturing recorded a monthly inflation rate of 2.4 percent while mining and quarrying recorded 1.3 percent and the utility sub-sector recorded the lowest monthly rate of -0.5 percent.

Dr. Nyarko said in August 2014 the producer price inflation in the mining and quarrying sub-sector decreased by -0.2 per cent over the July 2014 rate of 50.9 per cent, to record 50.7 percent in August 2014.

Manufacturing, which constitutes more than two-thirds of total industry, increased by 1.7 percent points to record 41.9 percent; and the rate for the utility sub-sector recorded inflation of 75.8 percent in August, suggesting 1.0 percentage point decrease over the July 2014 rate, Dr.Nyarko said.

She explained that in August 2013, the rate declined to the lowest level of 4.7 percent. In September 2013, however, the rate inched up to record 5.8 percent -- and subsequently the producer price inflation rate increased consistently over the last 11 months to record 48.3 percent in August 2014, which is the highest since January 2010.

Dr. Nyarko said from August 2013, the inflation rate in the petroleum sub-sector increased consistently to record 33.6 percent in September 2013. The rate fluctuated between October and December 2013, but started rising in April 2014 to record 48.2 percent in May 2014.

In June 2014, however, the rate declined to record 44.7 percent as a result of the base drift effect from the increase in price of petroleum products in June 2013.

In July 2014, the rate increased to record prices -- but in August 2014, the rate declined to record 68.6 percent due to the base drift effect.

Manufacture of coke, refined petroleum and nuclear fuel recorded the highest inflation rate of 68.6 percent, whilst producer prices in the manufacture of machinery and equipment recorded the lowest producer price inflation rate.

During the month of August 2014, four out of 16 major groups in the manufacturing sub-sector recorded inflation rates higher than the sector average of 41.9 percent.