The Effect Of PPI On Ghana’s Industries


The Ghana Chamber of Commerce and Industry (GCCI) has observed with concern, the rising Producer Price Index (PPI) and its attendant effects on industry in the country.

It said data from the Ghana Statistical Service for the month of July 2014 indicated that the PPI rose by 47.4 per cent, compared to July 2013, and that between June 2014 and July 2014, the rate of inflation increased by 10.2 per cent.

The GCCI raised these concerns in a statement signed by its President, Dr. Seth Adjei Baah, and copied to the Ghana News Agency (GNA) on Thursday.

?These are very steep increases in production costs for our members, who are already reeling under unfavourable local business environment. The situation makes domestic production and domestic industry uncompetitive relative to imported products. The Chamber believes this situation has the potential to worsen the country?s balance of trade. ?

It indicated that President Mahama?s campaign on the patronage of made-in-Ghana goods, although a laudable call, would remain an illusion if local industries could not produce to meet local demand due to rising cost of production as reflected in the soaring Producer Price Index.

?The rising import bills that have already resulted in large and growing trade deficit, have been the direct consequence of economic policy regimes that seem to penalize domestic production and make imports super lucrative. The implications for employment in particular and overall national development are obvious.

?Indeed, our excessive consumption of imported goods has been cited as one of the main reasons behind the rapid depreciation of the local currency?, the statement asserted.

It added that Ghana could not hope to build a strong industrial base if the business environment continued to deteriorate and production cost hit the roof, and emphasized the need to lighten the burden on domestic industry.

The Chamber cited the high cost of utilities as one of the key factors that fed into the rising cost of production for all other industries, and said what was needed was the political will to address the deficiencies in that sector to bring relief to both industry and households.

It further identified the tax rate and its administration as another aspect of the business environment that required constant and structured interactions between government and industry to address. ?The GCCI uses this opportunity to invite government to a dialogue on these and many other issues that are inimical to the industrial base of the country.?

According to the GCCI, the important lesson from countries that had made the transition from primary commodity production into industrial value added economies was that domestic industries that were considered strategic to national development, including employment generation, needed to be supported, protected and nurtured into maturity.

There is a lot that government working with the industry players across the board can do to avert a collapse of domestic industry and, therefore, called on government and other stakeholders to ?put hands on deck to mitigate the situation as swift as possible.?

The Producer Price Index measures average changes in the costs of production over a specified period.


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