Single-digit inflation target in limbo
The rate at which the general price level of goods and services change over time, that is inflation, inched up for the seventh consecutive time to peg at 11.8 per cent in July 2013.
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The rate is per the rebased Consumer Price Index (CPI) which has 2012 as its base index and is meant to reflect the actual consumption pattern of individuals.
Inflation slipped from the single-digit target by government in January 2013 after it recorded a rate of 10.1 per cent and has increased steadily to its current rate.
Although the combined pressure of the food and non-food basket pushes the rate up often, the trend for July was different as the food component recorded 7.3 per cent; same as June 2013.
The non-food component however recorded a rise from 15.1 per cent in June to 15.4 per cent in July 2013.
The Governor of the Bank of Ghana, Dr Henry Wampah, at the last Monetary Policy Committee (MPC) press briefing explained that inflation could further move up given the upside risk of potential pass-through effects of further petroleum price adjustments, possible adjustment of utility tariffs, and pressures arising from the impending public sector wage settlement.
According to him, these could be moderated by the tight monetary policy stance, the ongoing fiscal consolidation and favourable seasonal factors arising from the oncoming harvest season.
The Government Statistician, Dr Philomena Nyarko, responding to concerns about further increase of the rate could not give a definite stance as their work relied heavily on available data and not forecast.
But with the oncoming harvest season, the food inflation is likely to fall while other factors could push the non-food inflation up, making it difficult to determine the outcome of the rate in the months ahead.
She, however, explained that the rising exchange rate could affect the rate as not all food items are locally produced.
By Jessica Aheampong / Graphic Business / Ghana
