Inflation resumes upward trend — Hits 42.2% in May
After declining for the first four months of the year, the consumer price inflation has resumed an upward trend again, increasing from 41.2 per cent in April to 42.2 per cent in May.
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This raises fresh concerns for 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 29.5 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 May inflation
Last month’s inflation was driven by the furnishings, household equipment division, which recorded an inflation rate of 57.8 per cent.
This was followed by housing, water, electricity, gas and other fuels (54 per cent); personal care, social protection and miscellaneous services (53.4 per cent); food and non-alcoholic beverages (51.8 per cent), and alcoholic beverages, tobacco & narcotics (42.1 per cent).
The rest are transport (36.9 per cent); clothing and footwear (34 per cent); health (33.6 per cent); recreation and culture (29.6 per cent); information and communication (16.1 per cent); education (10.1 per cent); and insurance and financial services (10.2 per cent).
The restaurant and accommodation services division recorded the lowest inflation rate of 5.9 per cent.
Food inflation
Food inflation increased from 48.7 per cent in April to 51.8 per cent, while non-food Inflation, decreased from 35.4 per cent in April to 34.6 per cent.
Under food inflation, tea and related products recorded an inflation rate of 114.8 per cent, followed by fish and other seafood with 62.9 per cent.
The rest are cereals and cereal products (62 per cent); milk, other dairy products and eggs (52.9 per cent); sugar, confectionery and desserts (58.8 per cent); and fruit and juices (57.1 per cent).
Inflation for locally produced items was 36.2 per cent while that of imported items was 43.8 per cent.
Regional inflation
The Western North region emerged as the region with the highest inflation, recording a rate of 62.5 per cent.
This was followed by the North East region with 51.3 per cent and the Bono East region with 51.1 per cent.
The rest are Eastern region (47%); Bono region (46.6%); Oti (44.9%); central region (44.5%); upper west (44.4%); western region (44.2%); northern region (43.4%); and upper east (42.9%).
The Volta, Greater Accra, and Ashanti region recorded the least inflation rates of 34.6 per cent, 33.3 per cent and 31 per cent respectively.
Pull quote
Last month’s inflation was driven by the furnishings, household equipment division, which recorded an inflation rate of 57.8 per cent.