Consumer inflation kept an upward trend in July 2015, surging to 17.9 percent from the 17.1 percent recorded the previous month on the back of increases in prices of housing, utility tariffs, fuel and transport, the Ghana Statistical Services has reported.
This makes it the 7th straight months that inflation figures have risen since January this year when it stood at 16.4 percent, which shows that the rate at which prices of goods are going up is gradually eating away consumers’ savings.
The country’s inflation rate has been recording an average of 17.11 percent from 1998 until 2015, reaching an all-time high of 63 percent in March of 2001 and a record low of 0.40 % in May of 1999.
The latest inflation figure, which is 0.8 percentage points higher than the previous month’s figure, pushes it further away from the revised end of year inflation target from 11.5 percent to 13.7 percent, as government plans for taming rising inflation by year-end are part of its broader package of reforms to transform the economy and restore fiscal stability.
Fast growth in the economy, driven by exports of gold, cocoa and oil, has been undermined by problems including a rising budget deficit.
The country’s public debt has risen from GH¢9billion to GH¢90 billion as of May this year, a rate economic analysts have said is unsustainable.
DEFINITION of ‘Inflation’
The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling. Central banks attempt to stop severe inflation, along with severe deflation, in an attempt to keep the excessive growth of prices to a minimum.
As inflation rises, every cedi will buy a smaller percentage of a good. For example, if the inflation rate is 2%, then a GHc1 pack of gum will cost GHc1.02 in a year.
DEFINITION of ‘Consumer Price Index – CPI’
A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food and medical care. The CPI is calculated by taking price changes for each item in the predetermined basket of goods and averaging them; the goods are weighted according to their importance. Changes in CPI are used to assess price changes associated with the cost of living.
Sometimes referred to as “headline inflation.”
CPI is one of the most frequently used statistics for identifying periods of inflation or deflation. This is because large rises in CPI during a short period of time typically denote periods of inflation and large drops in CPI during a short period of time usually mark periods of deflation.
Food inflation is expected to ease during this month to the October harvest season, and this could influence the index in coming months. The monthly inflation change rate for July 2015 was 2.3 percent compared to the 1.8 percent recorded for June 2015.
Government Statistician Dr. Philomena Nyarko, addressing a media conference in Accra, explained that the main price drivers for the non-food inflation rate were housing, water, electricity, gas and other fuels which recorded the highest rate of 27.1%, followed by transport’s surge to 25 %.
Additional upward pressure came from clothing and footwear, 24.9%; miscellaneous goods and services, 19.1 %; restaurants, cafes and hotels, 20.5%.
On food inflation, the main price drivers were mineral, water, soft drinks, fruit and vegetable juices which recorded 14.5%; coffee, tea and cocoa recorded 14.3%; food products had13.9 percent; the while figure for sugar, jam, honey, chocolate and confectionery stood at 13.8 percent.
Meat and meat products recorded a figure of 11.6 %; milk, cheese and eggs had 9.6 %; and vegetables stood at 9.3 %.
For imported items, the inflation rate was 21.2 percent in July 2015 – the same as the rate recorded in June 2015 but 1.2 times that of the inflation rate for locally produced items, which stood at 17.0 percent in July 2015 compared with 15.5 percent recorded in June 2015.
On regional inflation, four regions including Central, Ashanti, Volta, and Upper East recorded inflation rates higher than the national average of 17.9%.
Ashanti Region recorded the highest food inflation rate in July 2015, while Volta Region record¬ed the highest non-food inflation rate in July 2015.
The Central Region recorded the highest year-on-year inflation rate of 19.8 percent, while the Northern Region recorded the lowest of 14.3%.