Inflation at 4-yr high

Consumer inflation kept an upward trend in August 2014, surging to a four-year high of 15.9 percent from the 15.3 percent recorded in the previous month on the back of increases in utility tariffs and fuel prices, the Ghana Statistical Services has reported.

 

This makes it the 12th straight month that inflation figures have risen since August last year when the figure reached 11.5 percent, which shows that the rate at which prices of goods are going up is gradually eating consumers’ savings away.

The latest inflation figures, which is 0.6 percentage points higher than the previous month’s figure, pushes it further away from the revised end-of-year inflation target of 13 percent -- plus or minus two percent -- set in the mid-year supplementary budget presented to parliament in July.

Government spending including civil-servant pay increases and lower revenue from key exports such as gold weighed on the fiscal deficit, which was forecast in July to reach 8.8 percent of gross domestic product this year from an earlier target of 8.5 percent.

The cedi has also slumped 35 percent this year against the dollar, pushing inflation to the August figure.

Government hoped to reduce inflation to 11-12 percent by the end of the year as part of a broader package of reforms to transform the economy and restore fiscal stability.  It is also expected to commence talks with the IMF this month for support.

 Food inflation is expected to ease during the August to October harvest season, and this could influence the index in coming months.,The monthly inflation rate in July was 1.6 percent.

The Deputy Government Statistician, Baah Wadieh, at a media conference in Accra explained that the main price-drivers for the non-food inflation rate were housing, water, electricity, gas and other fuels which recorded the highest rate of 61.7 percent, followed by transport which recorded 38.0 percent and the education sub-group that recorded the lowest of 3.5 percent.

The inflation rate for imported items, which registered 21.3 percent, is almost twice that of locally-produced items -- underlining government’s agenda to push made in Ghana goods to top of the consumption list.

The price-drivers for the food inflation rate were mineral water, soft drinks, fruit and vegetables juices which recorded a figure of 22.1percent, followed by coffee, tea and cocoa which recorded 14.8 percent.

Fast growth in the economy, driven by exports of gold, cocoa and oil, has been undermined by problems including a rising budget deficit and the cedi's rapid decline -- 27.5 percent since January, according to Bank of Ghana data.

Sugar, jam, honey, chocolate and confectionery had 11.7 percent while Milk, Cheese and eggs had 11.6 percent. Other food products had a figure of 10.9 percent, while cereals and cereal products had 10.9 percent. Meat and meat products and oils and fats recorded 10.5 percent and 5.9 percent respectively during the month under review.

The food and non-alcoholic beverages group recorded an average year-on-year inflation rate of 5.1 percent, 0.1 percentage points higher than the 5.0 percent recorded in July 2014.

Eight sub-groups of the food and non-alcoholic beverages group recorded inflation rates higher than the group’s average of 5.1 percent.

The non-food group recorded an average year-on-year inflation rate of 24.0 percent in August 2014, compared to a rate of 23.1 percent recorded in July 2014.

On the monthly rate, the change for August 2014 was -0.2 per cent, compared with the 1.6 percent recorded in July 2014.

On the regional level, Mr. Wadieh said Central Region recorded the highest year-on-year inflation rate of 20.4 percent while the Upper West Region recorded the lowest inflation rate of 12.3 percent.

Four regions, the Central, Upper East, Northern and Eastern Regions, recorded inflation rates above the national inflation rate of 15.9 percent.