Inflation: High exposure to imports to contribute to rise in cost of living – Analysts
Economic analysts with the SIC, have said the outlook of the country’s headline inflation remains negative as it expects inflation rate to remain high in the near term.
According to the analysts, inflation will remain high in the face of spiking global food, crude oil prices and continuing investor concern over the country’s large fiscal deficits putting downward pressure on the cedi.
“Hence, Ghana having high exposure to importation will suffer huge rise in the cost of living,” it added.
Regarding the monetary policy rate of the Central Bank, the analysts assert, they expect rising inflation to prompt BoG to further hike the monetary policy rate.
“The Central Bank further tightening of the policy rate is believed to be one of the conditions required for the country to reach a deal with the International Monetary Fund (IMF),” they posited.
The year-on-year inflation rate climbed further to 33.9% in August from 31.7% in July, reaching its highest level since August 2001, representing a month-on-month inflation increase of 1.9%.
The rate was mainly driven by Housing, Water, Electricity, Gas and Other Fuels which saw a 46.7% rise in inflation compared to 43.0% in July followed by Transport (45.7%); Furnishings, Household Equipment and Routine Household Maintenance (44.7%) and Recreation, Sport and Culture (36.4%).
Food inflation increased to 34.4% which is up from July’s food inflation of 32.3%. Non-food inflation stood at 33.6%, compared to 31.3% recorded the previous month. Overall month-on-month food inflation was 1.8%.
Inflation for imported goods was 35.2% while inflation for local goods was 33.4%. For five (5) months running, inflation for imported items exceeded domestic inflation.
At the regional level, the Eastern Region recorded the highest inflation rate of 41.0%% while the Upper East Region recorded the lowest inflation rate of 22.8%.
Just weeks after the Bank of Ghana (BoG) hiking lending rate in the country’s history, inflation rate at 33.9% marks – the 12th consecutive month that the rate has exceeded the top of the central bank’s target band of 8+/-2%.
This implies that the purchasing powers of Ghanaians have been further eroded, despite measures by the central bank to tame the uptick.
