Head of the Economics Division at the Institute of Statistical, Social and Economic Research, at the University of Ghana, Prof. Peter Quartey says stakeholders should expect the upcoming 15% increase in transport fares as announced by the Road Transport Operators, to increase national inflation in the coming months.
The new fares, which are expected to take effect from Saturday, February 26, 2022, will include fares for shared taxis, intra-city vehicles (tro-tro) and intercity vehicles (long-distance).
The increment, according to the Road Transport Operators, is in line with the administrative arrangement on public transport fares and comes after intense negotiations with stakeholders and in consideration of the plight of drivers, commuters and the general public.
The expected increase in fares is however not expected to stay within the transport space, as an increase in transport fares ultimately impacts other aspects of national life including the cost of food transported from food growing areas among others, which ultimately impacts national inflation which currently stands at 13.9 %.
Speaking to Citi Business News on the situation, Professor Quartey noted that rising inflation is being experienced across the world, but charged government to introduce policies to cushion Ghanaians.
“The point is that with the rising cost of living and fuel prices, drivers will certainly ask for an increment in fares. If you, however, look at the non-food basket of inflation, transport accounts for about 10.1%. That tells you that it will slightly affect other things like food and other things, but it won’t lead to a major shake-up in the national inflation rate. It will lead to some inflation but it shouldn’t be major.”
Prof. Quartey further expressed hope that the impact of the transport fares increase on inflation will be dampened with an increase in food production.
“The impact of the rise in transport fares can be dampened if our food production increases. You know inflation is caused by demand and supply-side factors, so if the supply side improves, it will dampen some of these occurrences. It might not erode it completely, but it will dampen any hikes. And we’ve seen the rains coming in and the likes, so production of some food items should mitigate the impact of transport fares on inflation.”