As Ghanaians continue to deal with consistent increases in the cost of the goods and services they consume, which have seen the country’s inflation rate rise consistently for 12 straight months, reaching 27.6% in May this year, leadership of the Bank of Ghana says 80 % of the current rate can be attributed to global factors.
As at May 2021 Ghana was enjoying the lowest rate of inflation it had recorded in years. At 7.5%, the rate had fallen within the medium term target band of the Bank of Ghana which has stayed at between 6 % and 10 % for some time. Fast forward to May 2022 and the story couldn’t be any different. National Inflation as at May this year had hit an 18 year high of 27.6%.
Speaking as part of the 8th Edition of the Absa-UPSA Law School Quarterly Banking Roundtable, on the topic: “Monetary Policy, Central Bank Leadership and the Stability of the Cedi”, the Head of Research at the Bank of Ghana Dr. Philip Abradu-Otoo reiterated the key factors, global and domestic, that have fed into Ghana’s current high inflation rate of 27.6% for the month of May.
“We see a surge in global crude oil prices, is that in the control of the Central Bank ? No. We see a rise in the price of metals, this has fed through our consumer prices. We again see a global rise in food prices. Is that in the domain of the Central Bank ? No. Especially if you look at grains and cooking oil and other things. We also rise in the cost of Agricultural inputs with the most popular one being fertilizer. Is that in the control of the Central Bank ? No.”
Dr. Abradu-Otoo meanwhile defended measures taken by the Central bank to help curb the high inflation rate, with the hope that the rate will soon begin dropping.
“All these factors have acted in concert. If you put them all together, I think the weight is 80% global and 20% domestic. I believe the Central Bank is doing what it can in its own little way to try to address the domestic component, with the hope that as we move along and as all these factors fizzle out, we’ll begin to see inflation decelerate nicely back into the target band.”