Although consumer inflation has been on the decline since last year August, when it stood at 9.9 percent, falling to a six year low since January 2013 (8.8 percent at that time), to record 9.0 percent in January 2019, the falling rate is threatened by possible fuel price increases.
According to the Institute of Energy Security (IES), February is forecasted to experience a substantial rise in fuel prices at the pump which it expects to happen at the next pricing window. It is estimated that a liter of fuel may perhaps go beyond GHc 5, due to increment in crude oil prices on the world market.
Effects of Cedi Depreciation
Furthermore, according to the IES the depreciation of the Cedi by about 2 percent since the beginning of the year, remains the single key variable likely to erode the price gains on the local fuel market over the past weeks, and move a liter of fuel (especially Gasoil) beyond the GHc5 per liter threshold once again.
According to BoG’s daily interbank FX rates as at the close of Thursday this week, the local currency is still struggling to stabilize against the US dollar as it was selling at GHc 5.0040. However, this may be much higher in other markets – such as the forex bureaus and black market – at between GHc 5.10 and GHc 5.20.
Nonetheless, some energy analyst predicts that some Oil Marketing Companies (OMCs) are likely to keep their prices stable to attract or maintain market shares in the current competitive fuel market. If that happens then the only other threat to continued falling inflation is the one presented by electricity prices. The Public Utilities Regulatory Commission is due to announce new electricity tariffs imminently and there are fears – not backed by any official statements however – that a significant increase will be announced ahead of the takeover of the Electricity Company of Ghana by Meralco. Like fuel prices, electricity tariff increases directly feed inflation.
The Consumer Price Index (CPI) which measures the change over time in the general price level of goods and services that households acquire for the purpose of consumption dropped by 0.4 percentage points from the 9.4 percent recorded in December 2018.
Food and non-food inflation for January 2019
The Food and non-alcoholic beverages group recorded an inflation rate of 8.0 percent, representing 0.7 percentage points lower than the 8.7 percent recorded in December 2018.
Four subgroups of the food and non-alcoholic beverages group recorded inflation rates higher than the group’s average rate of 8.0 percent. The subgroups were coffee, tea and cocoa (12.4 percent), fruits (10.0 percent), meat and meat products (9.8 percent) and mineral water, soft drinks, fruit and vegetable juices (9.3 percent).
The non-food group recorded a rate of 9.5 percent in January 2019, compared to the rate of 9.8 percent recorded in December 2018.
Five subgroups of the non-food group recorded inflation rates higher than the group’s average rate of 9.5 percent. Transport (13.4 percent), Clothing and footwear (12.8 percent), Recreation and Culture (12.7 percent), Furnishing, Household Equipment and Routine Maintenance (11.2 percent) and Miscellaneous goods and services (9.6 percent). Inflation was lowest in the Housing, Water, Electricity, Gas and Other Fuels subgroup (2.9 percent).
Regional differentials
At the regional level, the inflation rate ranged from 7.7 percent in the Upper East Region to 10.8 percent in Upper West region.
Four regions (Upper West, Brong Ahafo, Western and Ashanti) recorded inflation rates above the national average rate of 9.0 percent.
By Joshua W. Amlanu
