Utilities, Mining drive producer inflation upwards in July

Producer inflation rate has recorded its highest level in 32 months at 8.8 percent in July 2019.

Data released by the Ghana Statistical Service (GSS) indicates that, this increase was largely due to the sharp upsurges in the producer inflation rates for both utilities and the mining and quarry sub-sectors.

The rate recorded in July 2019, represents a 1.7 percentage point increase from 7.1 percent recorded in the previous month.

The Producer Price Index (PPI) measures the average change over time in the prices received by domestic producers for the production of their goods and services.

For the utilities sub-sector, producer inflation rate was 6.9 percent, indicating an increase of 5.8 percentage point over the rate recorded in June 2019.

Effective July 01, 2019, the Public Utilities Regulatory Commission (PURC) announced 8 percent and 11 percent rises in water and power tariffs and LPG gas prices, respectively. PURC attributed the hike in utility tariffs to the depreciation of the Ghanaian Cedi against the US Dollar and higher oil prices on international markets.

The producer inflation in the mining and quarrying sub-sector increased by 5.2 percentage points over the June 2019 rate of 22.4 percent to record 27.6 percent in July 2019.

The producer inflation for manufacturing, which constitutes more than two-thirds of total industry, increased by 0.1 percentage points to record 5.4 percent.

During the month of July 2019, seven out of the 16 major groups in the manufacturing sub-sector recorded inflation rates higher than the sector average of 5.4 percent. Manufacture of machinery and equipment recorded the highest inflation rate of 24.7 percent, while tanning and dressing of leather recorded inflation rate of 0.0 percent.

Trends

In July 2018, the producer inflation rate for all industry was 8.2 percent but declined continuously recording 5.8 percent in September 2018. In October 2018, the rate increased to 7.2 percent, but declined consistently to record 3.4 percent in January 2019.

Since January 2019, the rate resumed an upward trend to record 7.1 percent in April 2019 but declined to 6.7 percent in May 2019. However, the rate increased to 7.1 percent in June 2019 and then to current rate of 8.8 percent for the month of July 2019.