Inflation refers to the rise in the general prices of goods and services over a period. What is used in measuring this change in prices of goods and services is what is termed the Consumer Price Index (CPI). The recent inflation rate as measured by the Consumer Price Index is pegged at 27.6%, a 4.1% hike from prior month (pm)
In May 2022; at the individual regional level, Eastern region recorded the highest level of inflation at 31.2%, this same region as at last year had the lowest level of inflation at 2.6%. This year, Upper East inflation level turned out to be the lowest at 19.5%. (See figure 1 & 2).
May 2022 inflation seem out of the ordinary, being the highest over a decade in Ghana. This necessitates the need to provide a view by comparing Inflation yearly Change Rate for two periods, thus: August 2020 to May 2022 & August 2019 to May 2021.
Sharp hikes are seen between August 2020 to May 2022, especially in March 2021, March 2022, April 2022, and May 2022. Whereas August 2019 to May 2021 seem relatively stable over time. (See figure 3 & 4)
The question will be what may be driving the hikes especially in 2022? There are two drivers of inflation in Ghana which are (i) Food & Non-alcoholic beverages inflation and (ii) Non-Food inflation. In May 2022, Food & Non-alcoholic beverages are the key drivers of the rapid inflation level across all regions. Food & Non-alcoholic beverages had a CPI of 30%; combining with Non-Food inflation at 25.7% comes to the country’s inflation of 27.6%.
Items pushing the Food & Non-alcoholic beverages inflation in 2022 are seen below and compared against their CPIs in May 2021.
Oil and Fats products (52.1/+41.7 ∆pm), water (42.4/+42.6 ∆pm) and cereal products (37.2/+27.8 ∆pm) tops the chat for the rapid rise in Food & Non-alcoholic inflation rate (See Figure 5 & 6).
Items pushing the Non-Food inflation in 2022 are seen below and compared against their CPIs in May 2021.
Transport (39/+27.3 ∆pm), Furnishing & Household routines (33.8/+29.2 ∆pm), Utility & Gas (32.2/+12.4 ∆pm) tops the chat for the rapid rise in Non-Food inflation rate. (See Figure 7 & 8)
For Ghana’s inflation outlook, inflation rate is expected to rise for the few coming months but at a slower pace and begin to decline in early 2023 till it reaches a normalization level as stated by the Governor of Bank of Ghana, Mr. Ernest Addison.
Edem Korbla Agbavor.
