EXPLAINER: What inflation means to the ordinary Ghanaian

Foodstuffs Sun.png Prices of commodities have increased

Thu, 10 Mar 2022 Source: www.ghanaweb.com

In recent times, the prices of almost every commodity in Ghana have seen an increase since the Coronavirus pandemic broke. This has even hit much harder after various variants of the pandemic have erupted.

Why is everyone talking about inflation?

Inflation is a tool for measuring the rate of price increases in an economy.

Economists have also referred to when demand exceeds supply. This means that more money is chasing fewer goods.

When this happens, suppliers or sellers sell their goods at very high prices which in turn affects the consumer, leading to a high cost of living.

If inflation is occurring, leading to higher prices for basic necessities such as food, transportation it can have a negative impact on society.

People will now have to pay more for the goods and services they purchase.

Barely 3 months into the year 2022, fuel prices have increased up to over 25%.

Experts have said that this is a global situation since the eruption of the Russian-Ukraine crisis which has led to the increase in global prices of crude oil.

But isn’t there anything to be done by Ghana’s government, to at least cushion consumers?

Ghanaians are currently paying the full amount for fuel after the Price Stablisation and Recovery Levy was re-introduced at the beginning of this year.

Aside that, government charges about 6 taxes on fuel currently as follows:

Energy Fund levy (1p)

Sanitation and pollution levy (10p)

Price stabilization and recovery levy (16p)

Energy sector levy (20p)

Special petroleum levy(46p), Road fund levy (48p)

Energy debt recovery levy (59p)

Meanwhile, Vice-Chairman of Parliament’s Finance Committee and MP for Okaikwei, Patrick Boamah has said, “At this time, it’ll be very difficult [to reduce taxes on fuel], let me be honest with you."

"The government will make room but not to this extent. You see, you budgeted for between $60 to $70 a barrel and now fuel prices are $110 first times since 2014 so if you don’t take care and you say I’m going to reduce taxes on fuel to appease the opposition who are fanning this sort of argument, knowing that it’ll lead to a collapse of the economy for them to tell you that ‘aah he’s collapsed the economy, now he can’t pay salaries, there’s nothing for infrastructure’.”

Now if fuel which is one of the major components for calculating inflation keeps rising, shouldn’t there be other factors that could be looked at?

Well, if salaries and income of workers were increased periodically as prices increased, the impact will not have been so much felt.

But Ghana’s current minimum wage is GH¢13.53 and a litre of petrol and diesel is currently selling above GH¢8. This is an indication of the pressure that citizens are faced with.

As long as the factors which cause inflation are not regulated inflation will keep rising and as it happens citizens must be prepared to pay more for everything, i.e., food, transport, fuel, clothing, housing and others.

Author: Stella Dziedzorm Sogli

Source: www.ghanaweb.com
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