Data from Ghana Statistical Services (GSS) show there has been a substantial drop in Producer Price Inflation (PPI) – from 78.1 percent in November 2022 to 52.2 percent in December 2022.
This represents a 25.9 percentage point decrease in producer inflation relative to the rate recorded in the previous month. Noticeably, all the sectors recorded some level of decrease in inflation.
The PPI measures the average change over time in the prices received by domestic producers for the production of their goods and services.
According to GSS, the producer price inflation in the industry less the construction sector decreased to 65.7 percent in December 2022 from 94.3 percent in November 2022. In the services sector, the rate decreased from 12.6 percent in November 2022 to 10 percent in December 2022.
The mining and quarrying (73.4 percent), manufacturing (64.2 percent), transport and storage (63.6 percent) sectors recorded rates above the national average, while the information and communication sector’s activity recorded the lowest rate of 2.7 percent in December 2022.
This decrease in PPI may have a positive impact on Consumer Price Inflation (CPI), which is projected to continue rising and then peak in Q1 2023. The 54.1 percent logged in December 2022 further surpasses the 50 percent threshold – the highest level in two decades. The pace of inflation picked up as the GH cedi continued to suffer losses against the US dollar, deepening the exchange rate pass-through effects to inflation.
It is important to note that businesses ultimately pass on higher input costs to the customers behind them in the supply chain. As a result, the finished goods that these companies sell to retailers will cost more money.
The Construction Producer Price inflation (C-PPI) rate for December 2022 decreased by 4.5 percentage points logging 22.1 percent compared to the rate recorded in November 2022 (26.6 percent).
Diving in further, the data showed that inflation in the construction of buildings sub-sector decreased by 22.2 percentage points from the November 2022 rate of 100.2 percent to 78.0 percent in December 2022; while the rate for the civil engineering sub-sector decreased by 0.2 percentage points to 4.4 percent in December 2022.
The specialised construction activities sub-sector recorded a 4.9 percent inflation rate for December 2022 compared with 4.8 percent in November 2022.
Also, the Industrial Producer Price inflation (I-PPI) rate for December 2022 was 65.7 percent, indicating a 28.6 percentage point decrease in Industrial producer inflation relative to the rate recorded in November 2022 (94.3 percent).
The Industrial producer price inflation in the Mining and Quarrying sub-sector decreased by 42.2 percentage points over the November 2022 rate of 115.6 percent to 73.4 in December 2022. The Manufacturing sub-sector decreased by 20.1 percentage points to 64.2 percent in December 2022. Electricity and gas recorded a 30.4 percent inflation rate for December 2022, a decrease of 4.5 percentage points from the November rate of (34.9 percent).
The Service Producer Price Inflation (SPPI) rate for December 2022 is 10 percent, a 2.6 percent decrease compared to November. Month-over-month, it decreased by -2.6 percent. The Transport and Storage sub-sector decreased by 24 percent to 63.6 percent, and the Accommodation and food sub-sector decreased by 20.2 percent to 32.5 percent. The Information and communication sub-sector recorded 2.7 percent in December, an increase from November’s 2.2 percent.