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    GNCCI calls for stimulus packages for local businesses involved in AfCFTA

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    Sign Real Estate Authority Bill into law – Construction Chamber urges Akufo-Addo

    Ministry of Aviation rejects decision by British Airways to move flights to London Gatwick Airport

    Implementation date for demanding IDs from MoMo customers extended to April 1

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    GNCCI calls for stimulus packages for local businesses involved in AfCFTA

    FBNBank increasing access to affordable financial inclusion with agent banking [Article]

    Companies must help curb spread of COVID-19 amongst employees – Bureau of Public Safety

    Retailers of school uniforms cash in on mad rush for uniforms [Video]

    Stationery retailers enjoying gradual sales boom following schools reopening [Video]

    AGI troubled with rising COVID-19 cases and implications on demand of goods

    Lending rates won’t go down any time soon – Economist

    Business gradually booming for traders at University of Ghana as schools reopen [Video]

    Government must appoint only qualified persons to energy sector boards – COPEC

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    Huawei Watch Fit; The perfect smartwatch for everyone

    A close look at the Huawei FreeBuds 3; World’s 1st open-fit active noise-cancellation earphone

    Ashigbey urges government to revise telecoms industry laws to boost growth

    Blend tech with fashion with the new Huawei Watch Fit

    Kick back and enjoy immersive entertainment for the whole family with the MatePad T 10s

    Cost of political adverts on social media to rise by 200% in next election – Maximus

    Huawei announces global release schedule of EMUI 11 update

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    Stakeholders charged to eliminate barriers likely to impede success of AfCFTA

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Spending in December will not increase inflation rate – Economist

by Ellen Dapaah
October 16, 2020
in Local Economy, Markets, Top Stories
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Usually, Ghana’s inflation rate sees a rise ahead of a Christmas season. But this time round, things may take a different turn as economic activities return after COVID-19 hit hard in an election year.

This is according to an economist, Dr. Adu Owusu Sarkodie.

The inflation rate for September, which is 10.4 percent, is the second consecutive drop in two months after it decreased from 11.4 percent in July to 10.5 percent in August.

Although a huge rise in inflation has been predicted for this year due to distortions in economic activities largely caused by the COVID-19 pandemic and the impending election, Dr. Sarkodie told Citi Business News these activities will rather stabilize the country’s inflation rate.

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“We know election is coming on in December and government is going to spend. Christmas is coming and we are to spend. But the year 2020 is very different from the previous years because of COVID-19. COVID-19 has come to cause economic disequilibrium. It means aggregate demand has fallen short of aggregate supply. So when we restore equilibrium, there’ll be no cause for inflation. Now the country is in a disequilibrium meaning that our expenditure has fallen below what has been produced.”

He continued, “So if the government is able to spend to revive the economy, during Christmas, individuals and businesses are able to spend, then there will be no higher inflation. Rather, the expenditure by households, government and firms will help to restore the equilibrium which will not cause inflation. So I am still optimistic that the Christmas and election spending will restore the economy into normalcy.”

Contrary prediction

In a different opinion, an economist, Dr. Lord Mensah, has cast doubt on Ghana’s ability to achieve its end of year inflation target of 8 plus or minus 2 percent.

In an interview with Citi Business News, Dr. Mensah said aside the impact of COVID-19 which has resulted in an increase, factors such as the upcoming election and the Christmas season will make it difficult for the country’s inflation rate to go back to how it was before the pandemic.

“With the inflation dynamic, once you start drifting getting to the end of the year, it will be difficult to come back. If you look at the seasonal dynamics of inflation, history will tell you that once we are getting to the end of the fourth quarter inflation goes up, because the Christmas activities are there, and now it is also an election year so there will be pressure on the exchange rate.”

 

 

 

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