Ghana's Inflation drops to 20.06% for the first time in 2009
Masahudu Ankiilu Kunateh, Ghanadot

Accra, June 15, Ghanadot - Statistics released by the Ghana Statistical Service (GSS) revealed that Ghana’s inflation for the month of May, 2009 declined by 20.06% as against 20.56% for April, this year.

This represents a fall of 0.5 percentage points from the inflation rate for April 2009.

The dropped in the inflation rate for May, 2009 was the first time in 2009, since the Mills-led government took off.

The upward inflationary trend in the country’s inflation in the first four months of this year was a continuation of the surge in the rate of inflation which started in October, last year.

The trend observed in the first four months of 2009 is similar to that of the same period in 2008. However, the slight decline in the rate in May 2009 is deviation from the sharp rise observed in May 2008.

Economists hold the view that June’s inflation is going to be up, saying as the 30% hike in the prices of fuel will automatically affect the prices of goods and services in the country.

The major contributors to the decline of the May inflation rate are: the non-food group, which constitutes 55.09% of the consumer price basket, continues to exert its driving force on inflation in the country.

And in May 2009, the rate of inflation for the non-food group recorded 22.22% as against 17.17% for the food groups. The corresponding figures for April 2009 recorded 21.46 and 19.32% for non-food respectively.

Indeed, three sub-groups which recorded very high inflation rates in the non-food group are communications, health, and recreation and culture, while, transport sub-group recorded a negative growth.

Similarly, the sub-groups that recorded relatively high rates of inflation in the food group are milk, cheese and eggs, mineral water, soft drinks and juices, vegetables including potatoes and other tuber vegetables, and bread and cereals. However, oils and fats recorded a negative growth.

The contribution of a group or sub-group to the overall rate of inflation depends on the magnitude of price change for items within and the weight of the group in the Consumer Price Index (CPI) basket of goods and services. The weight reflects the level of consumers’ utilization of items in the group.

Furthermore, the month-to-month change (monthly rate of inflation) is the change in the CPI relative to that of the previous month. To this end, the monthly rate of inflation recorded in May 2009 was 2.77%, a slight decline from that of April 2009, which recorded 2.92%.

In the month of May, this year, the rate of inflation was higher in the urban areas of the country in the rural areas for the four consecutive months from February to May 2009.

Comparatively, the urban and rural inflation for May 2009 were 26.10 and 18.27% respectively.

The month under review, saw inflation rates recorded in the regions range from 26.46% to 12.63% for both Greater Accra and Western, whilst, four regions recorded inflation rates above the national rate of 20.06%.

Instructively, the CPI measures the average percentage change of the general price levels in the country, as experienced by consumers, with reference to the price levels in 2002, which is set to 100 (i.e. 200=100).

Ghanadot