Business News of 2014-06-17

High imports impacting inflation rate

The high level of imports into the country which has resulted in the decline in the value of the local currency has been partly attributed to the continuous rise in inflation, the government Statistician, Dr Philomena Nyarko, has said.

“Obviously, the depreciation of the cedi will affect the imported goods. So there will be some impact, only that we have not been able to estimate the impact,” she told a news conference on June 11, 2014.

For the month of May, inflation measures the average change in the prices of goods and services acquired by households for the purpose of consumption over a period of time rose marginally to 14.8 per cent from 14.7 per cent the previous month.

Although rising utility prices and cost of transport accounted for the rise in May, Dr Nyarko reiterated that the depreciation of the cedi resulting from imports also affected the present rate.

According to her, analysis showed that items that were imported were currently recording a high level of inflation as consumer preference for them had soared.

“For example, look at hairdressing materials; that have seen a high change in inflation at about 41 per cent. If you look at imported wine, people are consuming more wine now; we have an inflation rate of almost 30 per cent so all these things will reflect in the trend,” she explained.

Dr Nyarko said although there had been a slight increase in the rate, the tempo of the rise had declined lately.

“As you can see, lately, there has been a slight decline in the tempo of the inflation rate. In January 2014, the rate was 14.0, it moved to 14.5 per cent in March, then to 14.7 in April and now we are at 14.8 per cent,” she explained.

According to her, for the slight increase in the inflation rate, between May 2013 and May 2014, for housing, water, electricity, and other fuels, the inflation rate was 51.0 per cent.

“If you look at the individual commodities, we have kerosene alone recording an inflation rate of 144.6 per cent. If you look at water, those that are sold in buckets, barrels, jerrycans, the inflation rate was 105 per cent,” she said.

Food and non-food inflation

The food component of the inflation basket recorded a rate of 8.0 per cent which is 1.0 percentage points higher than the 7.0 per cent recorded in April 2014.

The main price drivers for the food inflation were mineral water, soft drinks, fruit juices, coffee, tea and cocoa and other food products.

The non-food basket, recorded a rate of 20.0 per cent in May 2014, compared with a rate of 20.6 per cent recorded in April 2014, with the main price drivers being housing, water, electricity, gas and other fuels with a rate of 51 per cent and transport with 27 per cent.

At the regional level, the Greater Accra Region recorded the highest regional year-on-year inflation rate of 16.1 per cent, followed by the Eastern Region with 15.9 per cent, while the Upper West Region recorded the lowest rate of 11.2 per cent.