The growth rate of prices received by domestic producers in November 2018 recorded a drop to 6.5 percent after it shot upwards in October to 7.2 percent, representing a 0.7 percentage point decrease in producer price inflation relative to the previous month.
This is according to the latest producer inflation index data released on Wednesday by the Ghana Statistical Service (GSS).
Explaining the reason for the fall in the rates at a media briefing in Accra on Wednesday, the Acting Government Statistician, Baah Wadieh attributed the decrease in the all Industry Inflation Rate to decreases in the inflation rates in the Manufacturing sub-sector.
Wadieh said, “the decrease in the manufacturing sector inflation rate from 9.7 percent in October 2018 to 8.6 percent in November 2018 was as a result of decreases in the inflation rate of manufacture of refined petroleum products and manufacture of food and food products.”
The decrease in the inflation rate for the manufacture of refined petroleum products from 36.1 percent in October to 30.6 percent in November was ascribed to decreases in prices of petroleum products.
For the manufacturing of food and food products, Wadieh noted that the decrease from 1.9 percent in October to 1.6 percent in November was due to the appreciation of the local currency since prices of some of the food items are received in dollars and are converted into Ghana cedis.
The manufacturing of food and food products group contributes about 26 percent to manufacturing sector weightings used to compute producer price inflation.
The Manufacturing sub-sector recorded the highest year-on-year producer price inflation rate of 8.6 percent, followed by the Mining and Quarrying sub-sector with 4.7 percent.
The Utilities sub-sector recorded the lowest year-on-year producer inflation of -0.1 percent.
Falling producer price inflation indicates that barring any sudden price shocks, such as sometimes occur in the utilities sector, the ongoing fall in consumer price inflation could be sustained – albeit after the traditional end of year increase in consumer price inflation generated by the customary spike in consumerism. However, empirical historical evidence shows very little correlation between producer price inflation and consumer price inflation, suggesting a disconnect between changes in production costs, factory door prices and final prices paid by consumers.
In November 2017, the producer price inflation rate for all industry was 7.1 percent. The rate increased to 8.7 percent in December 2017 but decreased consistently to record 3.7 percent in March 2018. Subsequently, it increased to 8.2 percent in July 2018, but declined to 7.0 percent in August 2018 and further to 5.8 percent in September 2018.
In October 2018, the rate increased to 7.2 percent but declined to 6.5 percent in November 2018.
By Joshua W. Amlanu