2019 Qtr 1 inflation set to decline

Despite the marginal increase of 0.1 percentage point in the consumer inflation for December 2018, figures over the years and the current macroeconomic circumstances suggest that this increase would see a reversal in the early parts of 2019.

Data from Ghana Statistical Service (GSS) indicates that December 2016 inflation recorded 15.4 percent, which however dropped to 13.3 and 13.2 percent in January and February 2017 respectively.

In December 2017, the inflation recorded was 11.8 percent after it had recorded 11.7 percent in November. This notwithstanding, early 2018 recorded a downward trend to 10.3 percent before a slight increase to 10.6 percent in January and February respectively.

Based on these trends, analysts believe that the first quarter of 2019 should see an easing in inflationary pressures, as both government and the Bank of Ghana project that their respective 2019 inflation targets of 8.9% and a band of 8±2 percent will be met.

The year 2018 closed with a single digit inflation of 9.4 percent, well within the BoG target band of 8±2 percent. Indeed, the central bank is now targeting an 8.0 percent inflation rate this year.

The latest data released by GSS shows that the year-on-year (y-o-y) inflation rate for December 2018 rose by 0.1 percent to 9.4 percent compared 9.3 percent recorded in November 2018.

The Consumer Price Index (CPI) measures the change over time in the general price level of goods and services that households acquire for the purpose of consumption.

Closing the year, the marginal rise in the inflation has been attributed to both the non-food group and food group.

The non-food group inflation rate rose by 0.1percentage points from 9.7 percent in November 2018 to 9.8 percent in December 2018 and the Food group inflation rate also rose from 8.6 percent in November 2018 to 8.7 percent.

Increased inflation for the non-food group was mainly due to a rise in the rates of inflation for the Clothing and Footwear group (0.4 percent), Hotels, Cafes and Restaurants group (0.4 percent), Housing, Water, Electricity, Gas and Others Fuels group (0.3 percent), Alcoholic Beverages, Tobacco and Narcotics group (0.3 percent), Furnishings, Household Equipment and Routine Maintenance group (0.2 percent) and Food and Non-alcoholic Beverages group (0.1 percent).

The food group on the other hand had the following sub-groups recording higher  inflation rates for December 2018 compared to November 2018:  Milk, cheese and eggs rose by 0.7 percent from 7.0 percent in November 2018 to 7.7 percent in December 2018;  Coffee, tea and cocoa rose by 0.7 percent from 12.8 percent in November 2018 to 13.5 percent in December 2018;  Meat and meat products rose by 0.7 percent from 10.2 percent in November 2018 to 10.9 percent in December 2018.

Regional Performance

At the regional level, the inflation rate ranged from 7.5 percent in the Upper East Region to 11.4 percent in Upper West region. Five regions (Upper West, Brong Ahafo, Western, Ashanti and Northern) recorded inflation rates above the national average rate of 9.4 percent.

Upper West region recorded the highest regional combined inflation rate (11.4 percent). Transport (22.8 percent), Miscellaneous Goods and Services (13.4 percent), Clothing and Footwear (12.5 percent) and Recreation and Culture (11.5 percent) were responsible for the high inflation in the Upper West region.

Upper West region recorded the highest regional non-food inflation rate (13.4 percent) due to a rise in inflation for the Transport subgroup.

Ashanti region recorded the highest food inflation rate (9.5 percent) due to Coffee, tea and cocoa (14.2 percent), Oils and fats (12.1 percent), Vegetables (11.8 percent), Non-alcoholic beverages (11.1 percent) and Meat and meat products (10.8 percent).

By Joshua W. Amlanu