Inflation resumes upward trend — Hits 23.5% in
Inflation has again resumed an upward trend having declined for five consecutive months towards the end of last year.
Advertisement
The general price levels increased marginally from 23.2 per cent in December 2023 to open the year with a rate of 23.5 per cent in January.
After reaching a 22-year high of 54.1 per cent in December 2022, inflation started declining in 2023, reaching 23.2 per cent in December 2023.
In response to the declining inflation, the Monetary Policy Committee of the Bank of Ghana last month reduced the policy rate by 100 basis points from 30 per cent to 29 per cent.
The phenomenon raises questions as to whether the inflationary pressures still lingering will force the central bank to return to its 30 per cent ceiling as it takes precautionary measures through a tighter monetary policy stance to check excess liquidity.
The unexpected turn of events is against the forecast of all international agencies and economic watchers who had earlier predicted that the country’s inflation would continue its downward trend through most of the year.
Drivers
The January inflation rate was driven by the alcoholic beverages, tobacco & narcotics division which recorded an inflation rate of 38.5 per cent.
This was followed by personal care, social protection and miscellaneous services (32 per cent), restaurant and accommodation services (29.2 per cent), furnishings, household equipment (27.7 per cent), food and non-alcoholic (27.1 per cent), health (26.6 per cent), and recreation, sports and culture (25.9 per cent).
The rests are clothing and footwear (22.8 per cent), housing, water, electricity, gas and other fuels (22.6 per cent), education services (19.8 per cent), information and communication (13.6 per cent); and insurance and financial services (8.6 per cent).
Interestingly, the transport division recorded the lowest inflation rate of 5.6 per cent.
Food and non-food inflation
Food inflation dropped from 28.7 per cent in December 2023 to 27.1 per cent in January 2024, while non-food inflation, increased from 18.7 per cent to 20.5 per cent within the same period.
Under food inflation, cocoa drinks recorded an inflation rate of 73.5 per cent, followed by tea and related products with an inflation rate of 71.2 per cent.
Vegetables, tubers, bananas, and plantains recorded a rate of 35.8 per cent, coffee (33.2 per cent), fish and other seafood (30.6 per cent), fruit and vegetable juices (29.8 per cent), live animals, meat (29 per cent), sugar, confectionery and desserts (27.4 per cent), ready-made food (26 per cent), and oils and fats (24.3 per cent).
The rest are soft drinks (23.6 per cent), fruits and nuts (23.3 per cent), milk, other dairy products and eggs (22.3 per cent), and cereals and cereal products (20.5 per cent).
Water recorded the lowest inflation rate of 8.4 per cent under the food inflation division.
Inflation for locally produced items was 24.2 per cent while that of imported items was 22 per cent.
