A practical view of inflation in Ghana.

Fri, 11 Mar 2016 Source: Dekportor, Mensah

The Ghana Statistical Services recently reported that Ghana’s inflation rate increased to 19% in January 2016 from 17.7% rate in December. This has been reported to be the highest inflation rate since August 2009 and has largely been attributed to a boost in prices of fuel, food and utilities after the recent rise in tariffs for electricity and water in December 2015. Obviously such a huge jump in inflation demands that the data supporting the drastic change in inflation figures be subjected to detailed scrutiny to determine whether the premises for the change are justified.

A general view of the data supporting inflation figures as reported by the Ghana Statistical Service indicates that there is no serious effort to ensure a distinction between living standards of Ghanaians in the urban centers and those residents in rural areas in data compilation. This is significant because nearly 49% of Ghanaians live in rural areas as compared to about 51% of Ghanaians that reside in urban centres. However when one examines the details of items that affect inflation in Ghana they largely tend to be items that are consumed by the 51% of residents in urban centres of the country. It is a fact for instance that the broad majority of residents in rural Ghana (49%) do not consume much of imported items such as tea and coffee which are prominently captured in Statistical Services data on inflation in Ghana. Thus to generalize and apply increased prices of imported items across board in national inflation data may not lead to a true reflection of actual inflation situation in Ghana. There is obviously a stark distinction in living standards and lifestyles in urban Ghana and rural Ghana. It is therefore relevant that this reflects in national statistical data gathering for true and accurate data to be captured in inflation figures as produced by the Ghana Statistical Service.

With regard to housing for instance, it has been cited as one of the key drivers of inflation in Ghana and bunched up with water, electricity, gas, fuel and transport. Is it urban housing or rural housing that is accounting for this huge jump? This is significant because a good 49% of Ghanaians live in rural areas and generally in structures that have been constructed long ago with local materials. It is a fact that rents in rural Ghana are not subject to drastic month to month fluctuations as is sought to be portrayed by the Statistical Services in its housing inflation data. With regards to urban housing it is a fact that rents in Ghana are generally paid in advance hence to create the impression that rents in Ghana are subject to month to month fluctuations is definitely not a true reflection of the reality on the ground. Again with regard to recent fuel prices increases which have been prominently cited as a key driver in the recent drastic rise in inflation, can one be right in wondering why Ghana’s inflation figures failed to reflect months of drops in fuel prices which took place prior to the recent fuel prices like Ghana.

Years back Dr. Bawumia and the NPP had cause to challenge the Ghana Statistical Services on its data collection methodology relating to inflation when inflation rates as quoted by Ghana Statistical Service were dropping and managed to get The Statistical Services to reform certain aspects of its data collection methodology. Incidentally since that challenge inflation figures have largely seen upward movements. The point is not to challenge the Ghana Statistical Services credibility because inflation figures are moving upwards. The point rather is that it is apparent that data collection in the Ghana Statistical Services has been reduced to a routine exercise based on a template for data collection that has failed to adequately reflect the distinctions in lifestyles and living standards in rural and urban Ghana. There has therefore been the tendency by the Ghana Statistical Services to base its data much more on items that reflect lifestyles in urban Ghana. The danger is that this might weigh excessively into national inflation figures when a whole 49% of Ghanaians that live in rural Ghana are largely unaffected by a lot of the items captured as key drivers in inflation figures.

With regard to utilities for instance, it is a fact that rural Ghana benefits largely from lifeline tariffs and do not pay the same rates that urban dwellers pay. The Ghana Statistical Services should therefore go the extra mile to ensure that its data captures the true demographics and distinctions in living standards in Ghana as a whole. They should release data that relates to true living standards across the broad spectrum of Ghanaian society in the interest of all as opposed to working with templates that leave room for discretionary and speculative data compilation.The Ghana Statistical Services should thus consider publishing details of inflation data that relate to rural dwellers in order for the 49% of Ghanaian rural dwellers to be adequately captured in national inflation figures.

God Bless our Homeland Ghana.

Report By:

Mensah Dekportor (Hamburg-Germany)

Email: cmdekportor@gmail.com

Columnist: Dekportor, Mensah