Housing, water, electricity drive inflation up

BY: Emmanuel Bruce

HOUSING, water, electricity, gas and other fuels division continues to influence the rate at which the prices of goods and services change over time in the country.

Those components pushed last month’s inflation up to 39.9 per cent for the first time in 21 years.

This was against the 31.7 per cent recorded in July, a development that is expected to impact interest rates and the rate at which the government borrows internally through the issue of treasury bills (T-bills).

Other drivers

The other drivers were Transport (45.7%); Furnishings, household equipment and routine household maintenance (44.7%); Recreation, sport and culture (36.4%); and Personal care, social protection and miscellaneous goods and services (36%).

The food and non-alcoholic beverages division recorded an inflation rate of 34.4 per cent in the period under review.

These six divisions all recorded inflation rates higher than the national average of 33.9 per cent.

Presenting the August inflation figures, the Government Statistician, Professor Samuel Kobina Annim, said the insurance and financial services division recorded the lowest inflation rate of 5.4 per cent.

For the third month in a row (since April 2022) imported items recorded a higher inflation rate of 31.3 per cent than locally produced items (29.2 per cent)

Food inflation

Food inflation for August also increased to 34.4 per cent, with non-food inflation also increasing to 33.6 per cent.

Inflation for imported items maintained its dominance over locally produced items with an inflation rate of 35.2 per cent and 33.4 per cent respectively.

The food inflation of 34.4 per cent was largely driven by the oils and fats subclass which recorded an inflation rate of 74 per cent.

This was followed by fruits and nuts (49.4%), fish and other seafood (46.4%), water (43%), milk, dairy products and eggs (42.2%), cereal products (40.1%), and fruit and vegetable juices (38.7%).

The rest are sugar and desserts (35.7%), live animals and meat (34.1%), soft drinks (32.6%) and ready-made food (31.1%).

The vegetable subclass recorded the lowest inflation rate of 18.2 per cent.

Regional inflation

At the regional level, the Eastern Region recorded the highest inflation rate of 41 per cent.

This was followed by the Western Region (40.2%), the Greater Accra (39.3%), the Central Region (34.6%), the Brong Ahafo Region??? (31.1%), the Upper West Region (29%) and Volta Region (28.1%).

Both the Ashanti Region and the Northern Region recorded an inflation rate of 25.9 per cent.

The Upper East Region recorded the lowest inflation rate of 22.8 per cent.

Prediction for September

Although some have argued that the rate for August means inflation in the country has reached its peak, the recent increases in water and electricity tariffs, as well as transport fares could likely shoot the rate up beyond 40 per cent.

Know this

- The Consumer Price Inflation measures changes in the price of a fixed basket of goods and services purchased by households

- The assumption is that the basket is purchased each month; hence, as the price changes each month, the total price of the basket will also change.