Inflation pain; target drifts further

Government’s end of year inflation target of 15 percent is set to be missed as headline inflation rate for the month of October reached 16.9 percent, moving far above expectations and pilling pressure on consumer pockets.

Consumer prices rose by 0.4 percent year-on-year in October, according to official statistics published by Ghana Statistical Service on Wednesday.

This makes it the 14th consecutive month that inflation has surged. It is also the highest since March 2010.

Policymakers have been grappling with rising-inflation as annual price changes remain above the governments 15 percent target rate, forcing the Bank of Ghana to hike its monetary policy rate by 200 basis points to 21% in an attempt to reduce money supply in the economy and fight inflation.

However, market-watchers are concerned inflation will keep rising as Christmas approaches -- a period associated with high spending -- and put the government’s macroeconomic targets out of range.

According to the Ghana Statistical Service, the upward inflationary pressures in October came mainly from housing, water, electricity, gas, transport and other fuels. Year-on-year, food inflation rose to 6.5 percent from 5.8 percent in September.

The latest inflation figures, which is 0.4 percentage points higher than the previous month’s figure, pushes it further away from the revised end-of-year inflation target of 13 percent -- plus or minus two percent -- set in the mid-year supplementary budget presented to parliament in July.

The inflation rate in the country has averaged 17.12 percent since 1998: it reached an all-time high of 63 percent in March of 2001, and recorded a low increment of 0.40 percent in May of 1999.

The Deputy Government Statistician, Baah Wadieh, at a media conference in Accra to announce the latest consumer price index, explained that the main price-drivers in the food and non-alcoholic beverages group recorded a year-on-year inflation rate of 6.5 percent.

This figure is 0.7 percentage points higher than the 5.8 percent recorded in September 2014. Seven sub-groups of the food and non-alcoholic beverages group recorded inflation rates higher than the group’s average of 6.5 percent.

The non-food group recorded a year-on-year inflation rate of 24 percent in October 2014, compared to 24.1 percent recorded a month earlier.Two sub-groups recorded year-on-year inflation rates higher than the group’s average rate of 24 percent.

“The year-on-year non-food inflation rate was about three and a half times as high as the food inflation, while the year-on-year inflation rate for imported items was about one and half times as high as the inflation rate for locally produced items,” he said.

Housing, water, electricity, gas and other fuel -- which were the main price drivers for non-food inflation, recorded the highest rate of 36 percent followed by transport with 30.6 percent. Inflation was low in the education sub-group at nine percent.

The main price-drivers for the food inflation rate were coffee, tea and cocoa (20.2 percent); meat and meat products (19 percent); mineral water, soft drinks, fruit and vegetable juices (18 percent); milk, cheese and eggs (16.9 percent); as well as sugar, jam, honey, chocolate and confectionery (16.3 percent).

Upper East Region recorded the highest regional year-on-year inflation rate of 19.7 percent, while the Upper West Region recorded the lowest of 13.4 percent. Six regions -- Upper East, Central, Northern, Eastern, Ashanti and Western -- recorded inflation rates above the national average of 16.9 percent.