January inflation surges to 19 percent

The country’s consumer prices surged to 19% year-on-year in January 2016, compared to a 17.7% recorded in December 2015, latest consumer price index has shown.
 

The latest inflation figure, which recorded 1.3 percentage points increase, is the highest rate since January 2013 and was mainly boosted by prices of fuel, food and utilities after increases in tariffs for electricity and water in December to ensure efficiency in utility production. 

The Public Utilities Regulatory Commission in December announced a 59.2 % increase in electricity tariffs while water went up to about 89%. In January fuel prices also went up by 27%.

Mr. Baah Wadieh, Deputy Government Statistician, announcing the latest consumer price index at a media conference in Accra explained that year-on-year the main ‘price-drivers’ for the non-food inflation rate were housing, water, electricity, gas and other fuels -- contributing about 45.5% while transport added 30.8%.

The ‘price-drivers’ for the food inflation rate were coffee, tea and cocoa, mineral water, soft drinks, fruit and vegetable juices, sugar, jam, honey, chocolate and confectionery, food products and vegetables.

The inflation rate for imported items was 18.7% in January 2016 compared with 18.3% in December, while that of locally produced items was 19.1% versus 17.5% for the same period.

On a monthly basis, consumer prices went up by 4.6%, compared to a 1.1% increase in the previous month.

The surge in the latest consumer prices is seen as a worrying signal, as businesses operators want government to concentrate on stabilising the cedi and reducing cost of borrowing to improve business confidence in the economy. 

The Association of Ghana Industries confirmed that business confidence dipped significantly in the last quarter of 2015. Their recommendation follows doubt about Finance Minister Seth Terkper’s claims that the economy is picking up. 

Mr. Terkper indicated that the economy has begun to show signs of recovery after the implementation of a raft of policy initiatives largely anchored on the ongoing US$918million Extended Credit Facility (ECF) from the International Monetary Fund (IMF).

Fiscal deficit as a percentage of GDP, he cited, has consistently followed a downward trend since 2012 when it rose to 11.5%. Last year, the deficit was 5.3 percent, with this year’s projected to be 5.3%.

Another key indicator of the economic turnaround project was a consistent reduction in the wage to tax revenue ratio. 

In 2012, more than 53 percent of tax revenue was committed to paying wages of public sector workers; but over the ensuing period, the ratio has dropped to about 44 %, with government projecting that this year’s will be a little over 40%.

But the minister said he is hopeful that the cedi will remain stable -- largely on account of inflows from donors, and tightening of monetary policy later in the year when the planned US$1billion Eurobond and annual cocoa syndicated loan hit government’s accounts.

Mr. Terkper also hinted that government might revise its 2016 budget, mainly due to the fall in crude oil prices. The benchmark oil price contained in the budget was US$53 per barrel, and the current prices of around US$30 means government could lose more than US$300million in oil revenues.

The inflation rate of the country averaged 17.13 % from 1998 until 2016, reaching an all-time high of 63% in March of 2001 and a record low of 0.40% in May of 1999.

On the regional figures, two regions -- namely the Ashanti and Greater Accra Regions -- recorded inflation rates higher than the national average of 19.0%.    

The Greater Accra Region recorded the highest year-on-year inflation rate of 23.1%, while Upper East Region recorded the lowest figure of 14.1%.