Tame inflation — Govt Statistician
Government Statistician wants policymakers to focus attention on what causes inflation to rise in the country and devise targeted solutions to address it.
Advertisement
Professor Samuel Kwabina Annim mentioned food inflation, for instance, and noted that the government could use one of its flagship programmes —Planting for Food and Jobs (PFJ) programme- to heavily increase the production of vegetables such as tomatoes and onions, as well as fish, which always soar due to inadequate supplies.
Such a policy direction, he noted, could have a positive impact on the general price levels in the country.
“There are about 20 items in the inflation basket whose individual aggregate contribution is always almost one per cent or slightly above one per cent,” he told the Graphic Business in an interview as he provided insights into how government can work to tame inflation.
He said the GSS has provided enough data and analysis, having drastically modified the method of data gathering with commentaries that should help policymakers in their decision-making, as they work towards contributing significantly to lower inflation rate in the country.
Trade insights
Referencing tomatoes as one of the dominant commodities that pushes inflation up, a columnist in the Daily Graphic, Dr Kofi Fynn, wrote in a piece which pointed to Ghana’s heavy reliance, for instance, on imported tomatoes from a Sahelian country, Burkina Faso, to meet the demands of its population.
He cited data from the Ministry of Trade and Industry which pegs the import from Burkina Faso alone at a staggering $400 million, adding that the recent insurgence in the Sahelian country meant that Ghana was in the middle of a tomato famine.
The same can be said for onion imports from other Sahelian countries where political turmoil has forced the prices of farm produce to increase by more than 300 per cent in many instances.
Other Trending Stories
While tomato production in Ghana has the potential to meet local demand, the country's tomato farmers face a range of challenges that have hampered their ability to produce enough tomatoes to meet domestic needs.
Consequently, he pointed to one key solution, which is the provision of import substitution funding from the government.
To him, the first step in addressing Ghana's reliance on imported tomatoes is to understand the factors that have led to this situation.
Corroborating the assertion of the Government Statistician, he proposed that one of the key factors is the lack of investment in the country's tomato industry.
Trade vulnerability
The GSS, for the first time, published Ghana’s trade vulnerability report last year, to widen the scope of external trade statistics and increase the frequency of disseminating statistics on the country’s international merchandise trade.
The publication, which had become more compelling, given the differential adverse impacts on economies due to COVID-19, economic downturns and geo-political arrangements, highlighted the present information on import and export for Ghana in 2022.
It revealed, for instance, that in 2022, the total value of Ghana’s imports stood at GH¢148.6 billion, about GH¢4.5 billion higher than exports, which amounted to GH¢144.1 billion.
The number of countries that Ghana imports from (209) is higher by 48 than its number of partner countries for exports (161).
Ghana’s three main export products are gold (37.5%), mineral fuels and oils (30.6%) and cocoa beans and products (12.4%), which constitute over 80.0 per cent of all exports.
Mineral fuels and oils account for more than a quarter (26.8%) of total imports, followed by machinery and electrical equipment (13.3%) and chemical products (10.7%).
Ghana’s trade relations, both exports and imports, are predominantly with Europe, constituting more than a third of all exports (35.9%) and imports (39.2%). This is followed by Asia, with 28.5 per cent of all exports and 37.2 per cent of imports.
The value of imports is higher than the value of exports for all continents, except for Africa and North America; exports to other African countries are GH¢13.2 billion higher than imports, and the difference is GH¢6.8 billion for North America.
Advertisement
Much as the trade pendulum tilts a bit in Ghana’s favour in terms of trade balance with other African countries, the danger still lingers because of the import of farm produce such as tomatoes and onions, which heavily impacts inflation.
Monetary policy
Some economic watchers also see value in the government emphasising goods and services that cause inflation to rise, saying that such a move could significantly complement the monetary policy stance of the central bank.
Inflation, as known, can be controlled by a contractionary monetary policy, which is generally one common method of managing inflation.
The Bank of Ghana has consistently, over the last couple of years, kept its policy rate high in a quest to control the money supply.
Advertisement
Although the bank is taking credit for the deceleration of inflation in the last couple of months, analysts believe that coupled with deliberate policies to target specific goods and services which cause inflation to rise, could be more helpful.
Inflation trend
Ghana’s economy has been battling high inflation, with general price levels reaching a 22-year high of 54.1 per cent in December 2022.
However, since the beginning of the year, inflation has been decelerating cumulatively from January 2023, consistently declining to 41.2 per cent in April 2023. It, however, started inching up again in May, hitting 43.1 per cent in July.
The months of August and September saw inflation decline to 40.1 per cent and 38.1 per cent, which is the lowest inflation recorded since September 2022 when inflation was 37 per cent.
Advertisement
Inflation fell significantly to 26.4% in November 2023 from 35.2% recorded in October 2023.
To confirm the accession by the Government Statistician, food inflation was the major contributor to the decline in the rate of inflation.
It dropped by 12.6% to 32.2% in November 2023. The month-on-month rate of food inflation was 0.8%, an indication that should the government focus attention on food production, inflation targets could be within the single-digit target.
In the same period under review, non-food inflation also eased to 21.7%, as compared with 27.7% in October 2023. The month-on-month rate of non-food inflation stood at 2.2%.
Whilst inflation for locally produced items was 26.1%, that of imported items stood at 27.1%.
Divisions higher than national average
According to statistics from the Ghana Statistical Service, five divisions recorded inflation rates higher than the national average.
They are alcoholic beverages, tobacco and narcotics (39.0%); personal care, social protection and miscellaneous goods and services (35.4%); food and non-alcoholic beverages (32.2%); furnishings, household equipment and routine household maintenance (32.2%) and restaurants and accommodation services (27.1%).
Eight out of 15 Sub-Class register inflation higher than overall food inflation
For Food inflation, eight out of 15 Sub-Class registered inflation above the overall food inflation of 32.2%.
They included Tea and related products (78.8%), Cocoa drinks (73.9%); Coffee and coffee substitutes (39.3%) and Fruit and vegetables (39.1%).
Regions with highest/lowest inflation
The Western Region recorded the highest inflation of 39.8%, whilst the Greater Accra Region registered the lowest inflation of 19.8%.
From the trend with the local currency stabilising in the last couple of months, expectations were that inflation could have dropped further in December, last year.
Planting for Food and Jobs (PFJ)
Late last year, the government launched PFJ Version Two to produce enough food stock for domestic consumption after it launched PFJ Version One some 6 years ago.
In the initial years, the country experienced a bumper harvest. However, over the past years, the country has witnessed a huge surge, especially in the food component of the CPI prompting calls by experts to review the PFJ policy.