Ghana has, for the second consecutive time this year, recorded the lowest year-on-year inflation rate.
The inflation rate recorded for the month of May 2021 was 7.5 percent, which is one percentage point lower than the 8.5 percent recorded in April this year.
The figure falls within the government’s medium-term inflation target of 8.0±2 percent and stands as the lowest recorded in more than two years.
Month-on-month inflation between April and May 2021 was 0.8 percent, which is 0.7 percentage points lower than what was recorded last month.
Background
The Ghana Statistical Service, in 2019, introduced a rebased Consumer Price Index as part of continuous efforts to improve the quality of its data.
With the new series, the year-on-year inflation rate as measured by the CPI was 7.8 percent in August 2019.
A month after the index was rebased, Ghana saw an inflation rate of 7.6 percent; the lowest inflation rate recorded in Ghana at the time.
The national year-on-year inflation rate was 7.5 percent in May 2021, and it was also the lowest recorded since the emergence of the COVID-19 pandemic in March 2020.
Regional inflation
At the regional level, the overall year-on-year inflation ranged from 2.6% in Western Region to 12.3% in Greater Accra Region. Upper West Region recorded the highest month-on-month inflation (4.3%).
Three regions saw a stark decline in food inflation as compared to last month. Western Region went from 6.5% to 0.4%, Eastern from 8.2% to 4.3%, and Ashanti from 9.8% to 5.9%. On the other hand, Volta Region saw an increase in food Inflation (5.6% to 9.8%).
Food and non-food inflation
This month, food inflation (5.4%) was lower than last month (6.5%) and the average of the previous 12 months (11.3%). This further leads to food inflation decreasing in its contribution to total inflation to 32.3%, the lowest contribution observed since the CPI basket was rebased in 2019.
Overall month-on-month food inflation was 1.3%, which is above the average month-on-month inflation. Low food inflation is driven by negative inflation for vegetables (-3.5%).
All non-food divisions recorded positive month-on-month inflation of max 1.4%. Like food inflation, non-food year-on-year inflation on average went down this month compared to last month (from 8.8% to 10.0%).
Out of the 13 divisions, ten had lower or equal year-on-year inflation in May 2021 than the rolling
average over the last 12 months.
Transport is the non-food division that recorded the biggest difference compared to the 12-month average (11.7% compared to 7.6%). This Transport inflation is driven by the inflation of Diesel (37.7% year-on-year and 10.0% month-on-month) and Petrol (34.0% year-on-year and 8.0% month-on-month).
This relatively high transport inflation leads the transport division to contribute 16.5% to total inflation, the highest percentage since October 2019.