Inflation rises for third consecutive month — Hits 43.1% in July

THE general price levels in the country which eased in the first four months of the year are beginning to inch up again.

Inflation has for the third consecutive month maintained its upward trend, with the Month of July recording an inflation rate of 43.1 per cent, compared to a rate of 42.5 per cent in June.

Measured by consumer price index (CPI), inflation resumed an upward trend again in May, increasing from 41.2 per cent in April to 42.2 per cent in May.

It further increased to 42.5 per cent in June and then to the present level as of July, a development which raises concerns about the impact of the inflation-targeting measures being implemented by the monetary policy managers.

It also raises fresh concerns about the economy, considering that the rise in inflation was one of the challenges that compelled the government to seek help from the International Monetary Fund (IMF).

Ghana’s economy has been battling with severe challenges in the last two years, with inflation hitting a 22-year high of 54.1 per cent in December, 2022.

In response to the rising inflation, the Bank of Ghana kept a tight monetary policy stance, consistently increasing the monetary policy rate to 30 per cent.

This, in turn, has increased the rate at which individuals and businesses borrow from the banks, considering that the policy rate is a key determinant of interest rates in the country.

Drivers of July inflation 

Last month’s inflation was driven by the personal care, social protection and miscellaneous services, which recorded an inflation rate of 60.5 per cent.

This was followed by the furnishings, household equipment division (56.9 per cent); food and non-alcoholic beverages (55 per cent); alcoholic beverages, tobacco and narcotics (48.7 per cent); housing, water, electricity, gas and other fuels (47.4 per cent); health (41.2 per cent); and clothing and footwear (36.2 per cent).

The rest are recreation, sports and culture (32.4 per cent); transport (28.5 per cent); information and communication (22.6 per cent); education services (17 per cent); and insurance and financial services (11.2 per cent).

The restaurant and accommodation services division recorded the lowest inflation rate of 6.9 per cent.

Food inflation 

Food inflation increased from 54.2 per cent in June to 55 per cent in July, with non-food Inflation also increasing from 33.4 per cent to 33.8 per cent.

Inflation for locally produced items was 37.5 per cent, while that of imprinted items was 45.7 per cent.

Under food inflation, tea and related products was the major driver, recording an inflation rate of 150 per cent, followed by cocoa drinks with 86.5 per cent.

Others are fruit and vegetable juices (66.7 per cent); cereals and cereal products (64.2 per cent); sugar, confectionery and desserts (62.7 per cent); oil and fats (59.7 per cent); milk, other dairy products and eggs (58.3 per cent); coffee and coffee substitutes (58.2 per cent); and fish and other seafood (57.7 per cent).

The rest are live animals - meat (56.2 per cent); water (52.8 per cent); ready-made food (45 per cent); soft drinks (44.7 per cent); and vegetables, tubers, plantains, bananas (41.5 per cent).

Regional inflation 

The North East Region emerged as the region with the highest inflation, recording a rate of 64 per cent in the period under review.

This was followed by the Western North with 55.8 per cent and Upper East with 50.2 per cent.

The rest are Eastern Region (48.8 per cent); Bono Region (48.3 per cent); Northern Region (48.1 per cent); Savannah Region (47.9 per cent); Western Region (47.3 per cent); Central Region (45.4 per cent); Bono East (44.4 per cent); Volta Region (43.7 per cent); Upper West (40.2 per cent); and Oti Region (38.6 per cent).

The Ahafo Region, Ashanti Region and Greater Accra Region recorded the least inflation rates.