Government Misses Target

Contrary to expectations by the government to meet on of its major economic targets for the year ending December 2006 of single digit inflation, headline inflation ended 2006 at 10.5 per cent, eluding the much anticipated Government of Ghana’s end of year single digit range target. The inflation rate opened the year 2006 at a level of 14.8 per cent, before sliding down to 9.5 per cent in April.

However, on account of the volatility of crude oil on the world market and its resultant effect on prices of petroleum based produces on the local market; the headline inflation rate charted a brief upturn and peaked at a level of 11.4 in July. With more favourable crude oil situation on the world market, the headline inflation rate re-assumed a downward trend for four consecutive months starting in August until it h it 10.3 per cent in November.

However, this trend was again reversed in December as the excess demand for products over the Christmas period had a knock on impact on consumer prices. According to the figures released by the Ghana Statistical Service (GSS), the food and beverages component of the Consumer Price Index (CPI) accounts for 51.9 per cent of the index, contributed the most to the up tick in consumer prices on a year-on-year basis. Barring any structural shocks, we expect inflation to resume it downward trend in the year, starting in March and remain anchored in single digit range over the course of the year.