Inflation falls

THE rate of inflation, the number one public enemy, has come down from the July figure of 34.9 per cent to 32 per cent at the end of August.

A Statistical Service newsletter on Consumer Price Index for August this year, published in Accra, said the non-food rate, which was 52.9 per cent last January, has come to 38.3 per cent, whilst that of food has come to 23.6 per cent from 26.3 per cent.

Under the prevailing development, yield on the 91-day credit should not be more than 38 per cent . A source close to the central bank said it expects that the banks would respond to the prevailing favourable conditions.

Stability of the national currency, the Cedi, has been a critical factor in the developments, said the source.

Watchers of the monetary policy indicate that tight monetary policy is yielding dividends.

The mopping up of excess liquidity in the system through open market operations (OMO) has contributed enormously to the development.

Records show that by August last year, less than ?700 billion had been mopped, as against ?1.7 trillion at the end of last month.

The source said “the fiscal performance has also not been bad this year at all, in line with the government’s declaration that it would not spend when it does not have the money”.

Even though orders for imported goods take effect from September, the signs are that the pressure would not be too much since the Ghanaian now gives premium attention to the cedi which is scarce, as against the dollar.

Many Ghanaians are very cautious about how they spend their cedis and always want to the take informed decision.

Signs are that should the prevailing development continue, the 25 per cent end-of-year rate of inflation target could be met without much problem.