Inflation drops marginally for first time in 2019

The general price levels of goods and services has dropped marginally for first time since beginning of the year, the Ghana Statistical Service (GSS) data have shown.

The GSS release, presented by Acting Deputy Government Statistician David Kombat, shows that inflation for May decreased by 0.1 percentage points to 9.4 from what was recorded in April, occasioned by decreases recorded in some items in the food basket and non-alcoholic beverages basket.

The Food and non-alcoholic beverages group recorded a year-on-year inflation rate of 6.7 percent, indicating 1.1 percentage points lower than the rate recorded in April 2019; whereas the non-food group recorded a year-on-year inflation rate of 10.6 percent in May 2019, compared to 10.4 percent recorded for April 2019.

Inflation for imported items was 11.2 percent in May compared to the 11 percent recorded in April. That of locally produced items recorded a 0.2 percentage increase from May to 8.8 percent in April.

The Upper West Region recorded the highest year-on-year inflation rate of 11.1 percent, followed by Brong Ahafo Region with 10.5 percent, while the Upper East Region recorded the lowest rate of 8 percent.

The drop in general price levels, though marginal, will give the central bank some reprieve as a 0.5 percentage increase in inflation from January to April has taunted the Monetary Policy Committee of the Bank of Ghana, making it impossible for the policy rate to see a decline on two consecutive occasions.

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The Monetary Policy Committee last month announced that the policy rate has been maintained at 16 percent, given recent developments that have slowed the disinflation process.

“On the inflation outlook, the Committee noted that the recent exchange rate pass-through has slowed the disinflation process – leading to a slightly elevated inflation profile as shown in the latest forecasts. However, core inflation remains subdued and inflation expectations fairly anchored.

“Under the circumstances, the Committee decided to keep its policy rate unchanged at 16 percent. The Committee will continue to closely monitor both global and domestic developments, and stands ready to take appropriate measures, if necessary, to maintain price stability,” said the Bank of Ghana Governor, Dr. Ernest Addison.

So, the marginal drop in inflation in May will provide some respite for the BoG to cut its policy rate – if the trajectory continues over the next few weeks leading up to the next policy rate announcement.

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