An economist and Senior lecturer at the University of Ghana has downplayed the effect of the drop in inflation to 16.7% in July against the 18.4% recorded in June 2016 of this year.
According to Dr. Lord Mensah, this was expected as the exchange rate has been stable coupled with the fact that government seems to have been adhering to the expenditure controls imposed due to the IMF programme.
“Inflation over the years has some seasonal components because during the year, inflation fluctuates within certain bounds. During the second and third quarters of the year, normally inflation is recorded at the lowest values compared to the rest of the year,” he told Citi Business News.
Dr. Lord Mensah however indicated that the trend would change as importers will soon make orders for the festive season.
“For now we can record this low inflation because Ghana is an import driven economy and exchange rate has also been stable for some time now if you look at it carefully. So those importers who import from outside are able to determine the pricing” he stated.
Dr. Lord Mensah told Citi Business News that Ghana’s program with the IMF which poses serious controls on expenditure, has played a major role in the fall of the inflation as the government has generally adhered to set targets.
In addition, are decisions like consumer fuel pricing due to the deregulation of the petroleum downstream sector.
He therefore was of the strong view that “this is not surprising as every year we have inflation skyrocket at the beginning of the year but around this time of the year its begins to fall to its all time low within that particular year.”
According to figures from the Ghana Statistical Service (GSS), inflation for July 2016 dropped significantly to six months low of 16.7%; compared to the 18.4% recorded in June 2016.
According to the GSS, the drop was due to cedi stability and seasonality effect on food pricing.
The year on year non-food inflation rate however declined to 21. 2percent from 24.1 percent between the one month period.
The consumer price index measures the change over time in the general price levels of goods and services that households require for the purpose of consumption.
Meanwhile, the inflation rate for imported items decreased to 15.2 percent in July 2016, from the 17.3 percent recorded in July 2016 while inflation for locally produced items was however 2.1 percent higher than the imported items in July.
The main price drivers for the non food inflation rate were education (35.4%) Recreation and culture (28.3%), transport (25.4%) housing, water, electricity, gas and other fuels (25.4%) clothing and foot wear (24.3%) and furnishing households equipment and routine maintenance (23.0%).
By: Norvan Acquah – Hayford/citibusinessnews.com/Ghana