Ghana’s runaway inflation: ‘Greedflation’ phenomenon
Over the last three years, Ghana has endured more suffering than its share of bad news and adversities. Fluctuations in global economic recovery have caused the economy to shrink. A heatwave of inflation has diffused into the global economy with no exception.
Ghana’s inflation is 27.6 per cent as of May 2022. This is a result of the persistent fluctuations in the Consumer Price Index (CPI) and the rudiments of the Russia-Ukraine war which cannot be overemphasised — pushing up the prices of imported food items.
Advertisement
Casting our minds back to elementary economics, we know that the CPI is a tool for measuring inflation.
The CPI measures the changes in the price of a fixed basket of goods and services purchased by households — with the assumption that households purchase a basket of goods and services monthly, hence price changes occur monthly.
We also know that the CPI is influenced by food inflation. Food inflation, moreover, contributes significantly to year-on-year and month-on-month overall inflation.
The issue on the ground is that producers and sellers in Ghana (wholesale and retailers) have taken advantage of the challenging times facing the economy and self-inflating prices of goods and services — especially food items.
The term “greedflation” is coined from this unacceptable and greed-bound practice.
In the spirit of the torrential rains experienced lately, one would expect that prices of food items would fall because of the expectations of a bumper harvest. But this is not the case.
The contribution of year-on-year food inflation for May 2022 to the overall inflation was 30.1 per cent.
This was predominantly caused by fats and oils (52.0%) and water (42.4%). On a month-on-month basis, three subclasses; cereal products (5.3%), vegetables (5.4%) and oils and fats (6.5%) recorded inflation rates higher than the overall inflation (4.0%).
Generally, these subclasses of food items are the most consumed by Ghanaians, hence the justification of food inflation partly causing the runaway inflation.
The statistics clearly show that “greedflation” — as producers and sellers persistently inflate the prices of goods and services, the higher the inflation rate in the economy. This practice is predominant in the nation’s capital, Accra.
A ball of Kenkey is sold at different prices at different locations — the same applies to other food items.
To help reduce the burden of the economic downturn on citizens, producers and sellers (wholesale and retailers) should refrain from the practice of self-inflating prices of goods and services, which has the potential to accelerate overall inflation through food inflation.
Moreover, it is high time a regulatory body is established to regulate and control the incessant price discrimination practiced in the nation’s capital and other parts of the country.
The writer is an MPhil Economics Student at the University of Ghana. E-mail: [email protected]