Inflation for April 2018 dropped its lowest in more than five years, to 9.6 percent from 10.4 percent in March, the Ghana Statistical Service has announced.
According to the Acting Government Statistician, Baah Wadieh, the significant drop can be largely attributed to happenings in the non-food basket.
“We realised that inflation in the non-food group declined from 11.8 percent in March 2018 to 10.6 percent in April 2018, and we are attributing this as the main reason why inflation dropped to 9.6 percent,” he said.
“But within the non-food group we have some key price-drivers. The transport group recorded a drop in its inflation rate by 8.9 percent; then we have housing, water and electricity also recording a fall of 3.4 percentage points.
“For transport, the drop is due mainly to base drift effect. For electricity, we observed that the inflation rate fell from -0.1 percent in March to -17.5 percent in April 2018 due to an actual price reduction of 17.5 percent in April, and this caused that substantial fall in the inflation rate. So, these impacted the other sectors and the end-result is what we see in the April inflation rate,” Mr. Wadieh said.
Four subgroups in the non-food basket—clothing and footwear, recreation and culture, furnishings, household equipment, and miscellaneous goods and services—all recorded rates above the average 10.6 rate in this basket.
In the food and non-alcoholic beverages basket, the inflation rate was 7.4 percent, 0.1 percent higher than the previous month’s. Six subgroups in this basket also recorded rates higher than the average rate.
Inflation for imported items recorded 12 percent, 3.5 percentage points higher than that of locally produced items of 8.5 percent.
At the regional level, the year-on-year inflation rate ranged from 8.2 percent in Upper East Region to 11.7 percent in the Upper West Region.
Five regions—Upper West, Brong Ahafo, Western, Northern and Ashanti – recorded rates above the national average of 9.6 percent. Upper East recorded the lowest rate in April 2018.
The significant drop comes as a boost to the economy, as the rate is just 0.2 percent shy of government’s target of 9.8 percent for the year.
The Bank of Ghana will also announce a new policy rate later this month. At its last MPC meeting, it reduced the policy rate from 20 to 18 percent, citing easing in inflationary pressures.
“The disinflation process continued to firm-up over the first two months of the year, with significant moderation in price pressures. Both headline and core inflation broadly trended down, alongside easing inflation expectations – an indication that the disinflation process remains well-anchored,” said BoG Governor, Dr. Ernest Addison.
“The Committee noted that the current inflation forecast provides scope for monetary policy to realign interest rates, translate the disinflation gains achieved so far to the market, and reinforce the fiscal consolidation process by easing the burden of interest payments on the budget. Under these circumstances, the Committee decided to reduce the monetary policy rate by 200 basis points to 18 percent,” he added.