Inflation scare still looms

Expected to rise into second quarter

Despite the central bank’s monetary tightening efforts and even though pressure from the external sector has calmed on a near-stable crude market, domestic commodity prices would likely rise past the first three months of the year, Ghana’s statistical office has noted.

Conventional upward movement in the prices of local staples during the planting season and the pass-through of the effects of a weakening cedi on the prices of imported commodities are expected to feed into general price levels in the country for the months ahead, the source explains.

At a meeting with the press last Friday, the Government Statistician, Dr Grace Bediako, announced that consumer inflation for the month of February 2009 had soared to 20.34%, a rise of 0.48 percentage points over the corresponding figure for January 2009 which was 19.86%.

February’s inflation hits an all-time peak in 5-years after the rate had hit 22.4% in January 2004. After months of consistent marginal increases in inflation at the beginning of 2008, there was a gradual decline in inflation from July to October 2008. The decline could not be sustained as the rate started moving upwards since November 2008.

In the words of Dr Bediako, “the rise in inflation in the early months of this year had been expected as had been the case for instances when the preceding year had ended on rising inflation”.

She explained that the rise in inflation for February 2009 had resulted from appreciable price increases in non-food items.

“Five commodity groups contributed more than one percentage point each to the annual rate of inflation for February,” she said.

The groups included the hotels, cafes and restaurants group; furnishing, households equipment and routine maintenance; clothing and footwear; health; and recreation and culture. The aggregate contribution of the non-food component of the Consumer Price Index (CPI) to inflation was 11.76%.

The food group on the other hand contributed 8.58% to inflation, with three sub-groups contributing more than a percentage point each. These included the vegetables including potatoes and other tuber vegetables group; bread and cereals; and fish subgroups.

Month-to-month change in inflation was as well up for the month of February, albeit, at a slower pace than it was for January 2009. The monthly rates for the two months were 2.00% and 2.64% respectively.

For the regional differentials, the Government Statistician announced that the Upper regions witnessed the highest inflation of 28.61% whilst Volta remained at the bottom with 14.37%. Three other regions recorded inflation rates above the national average and included the Northern, Greater Accra and Eastern Regions. Urban inflation remained higher than rural inflation for the month of February.