Cap inflation; spend to grow economy – Quartey to Government

The Head of Economics Division at the Institute of Statistical Social and Economic Research is pushing for the capping of the inflation rate in Ghana.

Professor Peter Quartey believes this is critical to help businesses project and expand their operations.

Speaking at the 4th Economic and Business Breakfast Forum, Professor Quartey said even though a stable inflation rate is good, some level of increase is needed to promote spending in the economy.

According to him, government should not be more fixated about economic growth than single digit inflation.

“We expect that as a country we should have an optimal level of inflation. We need to estimate and know that this is the level of inflation that is not going to hurt jobs and that we ensure that you grow.

“Because there is a trade-off between inflation and employment. As government tries to cut down on spending; if you are not spending you are not also helping to create jobs. So we need to strike a good balance between how much inflation you can contain to ensure that businesses are able to project; are able to invest; are able to make revenue.

“In the same way, you also have to have a cap on how much inflation you can contain,” Professor Quartey said.

Government’s end of year Consumer Price Inflation (CPI) target of 8.9 per cent for 2018 was missed narrowly, as the CPI hit 9.4 per cent as of December 31, 2018.

Meanwhile, the inflation rate has stayed in the single digit zone for more than six months.