March 24, 2023

Ghana’s Inflation Rate Rises To 31.7% In July 2022

Ghana’s inflation rate rose further in the month of July 2022 after the headline rate surged to 31.7% from 29.8% recorded in the previous month. Recall that the country’s inflation rate touched a 19-year-high in June, as a result of a surge in transportation costs.

The hike in transport cost is due to the sustained global energy prices, which has seen the price of gasoline hit record highs, as crude oil prices remain elevated. Also, higher cost of household equipment and maintenance, and utilities like electricity, gas, and water contributed to the uptick in the inflation numbers.

The West African nation has witnessed a sharp rise in its year-on-year inflation rate, despite averaging 12% in the last quarter of 2021. However, inflation rate averaged 27% in the second quarter of 2022 and is set upward with a 31.7% rate in the review month.

This uptick is coming after Ghanaians took to the streets of Accra in June to protest against new taxes on electronic transactions as well as other economic hardships being faced by the people.

Notably, inflation rate at 31.7% is the fastest pace since November 2003, also marking the 11th consecutive month that the rate has exceeded the top of the central bank’s target band of 6 to 10%. According to Bloomberg, the Ghanaian cedi has depreciated by 30% against the US dollar year-to-date, indicating the second-worst performing currency in the world.

In a statement by Government Statistician, Samuel Kobina Annim on Wednesday, annual imported inflation was 33.9% in July and has now outpaced domestic price growth for four months. He noted that locally produced inflation stood at 30.9%.

Food-price growth quickened to 32.3% from 30.7% in June, and non-food inflation accelerated to 31.3% from 29.1%. Prices climbed 3.1% in the review month, he added.

Meanwhile, the central bank has raised its main lending rate by 550 basis points since November 2021 to try to curb the rising inflation, while all three major credit rating agencies have downgraded Ghana’s sovereign bonds into ‘junk’ status.

Why this matters

The world is battling with unprecedented levels of high inflation rates as a result of the Russia-Ukraine war, which triggered a surge in crude oil prices and consequently a global energy crisis. Hence, most economies with exposure to importation have suffered huge rise in the cost of living.
This implies that the purchasing powers of citizens in Ghana have been further eroded, despite measures by the central bank to tame the uptick.

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