Inflation to increase to 13.3% in May 2017

Ghana Statistical Service (GSS) is expected to announce the consumer price inflation for the month of May 2017 in the coming days.

The year-on year inflation rate measured by the CPI with 2012 as the base year with an index of 100 stood at 13.0% in April 2017 as against the 12.80% recorded for March 2017, representing a monthly rate of change of 1.56%.

Latest statistics from the GSS shows that Consumer Price Index (CPI) increased to 197.2 points April 2017, from 174.4 points recorded for April 2016.

The Food and nonalcoholic beverages group recorded a year-on-year inflation rate increased slightly to 6.7 per cent representing a 0.6 percentage point decrease from the 7.3% recorded in March 2017.

Three subgroups within the food and nonalcoholic beverages group recorded inflation rates higher than the group’s average rate of 6.7%.

These are Fish and sea food subgroup (13.6%), Meat and meat products recorded (10.9%) and coffee tea and cocoa (7.2%).

On the other hand, non-food inflation group recorded a year-on-year inflation rate of 16.3% in April 2017, relative to the 15.6% recorded in March 2017. Within the non – food group, five subgroups recorded more than the 16.3% average year – on – year inflation for the group.

These are Transport (24.9%), recreation and culture (22.3%), furnishing, household equipment and routine maintenance (21.9%), miscellaneous goods and services (16.8%) and clothing and footwear (16.7%). However, the Housing, water, electricity, gas and other fuels subgroup recorded the lowest inflation rate of 7.7%.

A glance at food prices on the world market suggests an increase for the month of May 2017.

According to the Food and Agriculture Organization (FAO), the Food Price Index (FPI) increased from 168.0 in April 2017 points to 172.6 points in May 2017. This is almost 10 percent higher than its May 2016 level.

The FAO Cereal Price Index (CPI) increased by 2 points to 148.1 points in May 2017 while the FAO Dairy Price Index also went up by 9.5 points to 193.0 points. Also, the FAO Vegetable Oil Price Index and the FAO Meat Price Index increased by 7.6 points and 2.5 points respectively.

However, the FAO Sugar Price Index recorded a 13 – month low of 227.9 points, representing a 5.4 points reduction from 233.3 points in April 2017. On the domestic front, the cedi recorded on average 0.11%, 0.10% and 0.27% depreciation against the Dollar, the Pound and the Euro. For example, the cedi started May trading at GH?4.1886 and ended the month at GH?4.2856. This should have a pass through effects on inflation for May.

Considering the relative stability in utility prices, increased food prices on the world market, the cedi depreciation, monetary policy stance and the historical trend of inflation, we expect inflation to increase to 13.3% for the month of May 2017.