Consumer inflation rose to 42.50 percent in June 2023 from 42.2 percent the previous month, in line with expectations.
The rise, Ghana Statistical Service (GSS) said, is attributed to renewed price risks stemming from the implementation of revenue and utility tariff measures in May of this year.
It was driven primarily by food inflation, which accounted for 54.2 percent of the headline inflation figure – further increasing from 51.8 percent in May.
While this marginal increase marks the second consecutive month of a disinflation trend observed earlier this year, experts believe that the inflationary effects are temporary as the pass-through effects of new levies and utility tariff hikes have already impacted general prices.
Market analysts anticipate that the combined impact of revenue measures and rising food prices will push headline inflation higher in June and possibly July.
In the first half of 2023 inflation showed signs of easing, dropping from a peak of 54.1 percent in December 2022 to 41.2 percent in April 2023. However, inflation increased by 100 basis points in May; reversing the downward trend. The GSS had previously noted a gradual slowdown in the rate of price increases earlier this year, with a significant decrease in inflation from 52.8 percent in February to 45 percent in March.
The latest inflation data for June provides further insights into pricing trends, and will guide future policy decisions by the Monetary Policy Committee of the Bank of Ghana – amid concerns that the minutes of the Federal Open Market Committee (FOMC) in the US indicated a bias for further tightening, depending on the economy’s evolution.
The rising inflation poses challenges for both fiscal and monetary authorities. Fiscal authorities aim to control rising financing costs to meet the International Monetary Fund’s (IMF) bailout conditions, while the monetary authorities cannot lower interest rates due to high inflation and recent price developments in the real economy.
On a positive note, month-on-month inflation saw a slight easing of prices for goods and services to 3.2 percent in June 2023 – marking the second consecutive month of moderation. In comparison, inflation increased by 4.8 percent in May compared to 2.4 percent in April 2023. This development is encouraging, given the previous upward trends.
The GSS said the month-on-month food inflation rate significantly eased to 3.9 percent from 6.2 percent in May. Non-food inflation stood at 33.4 percent, a decrease from 34.6 percent in May 2023. Similarly, the month-on-month non-food inflation rate was recorded at 2.6 percent in June, down from 3.5 percent. Inflation for locally produced items declined to 35.9 percent from 36.2 percent, while inflation for imported items increased to 44.5 percent from 43.8 percent.
