Prices of goods to increase further if producer price inflation is not checked – AGI warns
As Producer Price inflation in the country continues to surge, prices of final goods will also continue to rise, the Association of Ghana Industries (AGI), has warned.
According to data obtained from the Ghana Statistical Service, the year-on-year producer inflation for all industries was 29.3 % in March 2022.
The 29.3 percent year-on-year producer inflation rate for all industries indicates that between March 2021 and March 2022, prices received by domestic producers for the production of their goods and services increased by 29.3 percent.
In March 2021, the producer price inflation rate for all industries was 13.0 %.
The rate decreased to a record 10.9 % in April 2021 but increased to 11.8 percent in May 2021.
The rate decreased continuously to a record 8.1 percent in August 2021.
Subsequently, the rate resumes an upward trend to increase continuously to a record 29.3 % in March 2022.
The Manufacturing subsector, which constitutes more than two-thirds of the total industry, increased by 7.2 per cent, recording the highest year-on-year producer price inflation rate of 36.0 percent.
Speaking in an interview, the Greater Accra Regional Chairman of the Association of Ghana Industries (AGI), Tsonam Cleanse Akpeloo disclosed that, if the rising prices of inputs are not checked it will lead to more manufacturers becoming importers.
“The rate of the producer price inflation is significant because what it means is that, by the time the cost of inputs goes up by the levels we’ve seen, it ends up affecting the entire production cycle, the cost of production and the final price that goes to the final consumer. The reality is that the exchange rate instability we’ve witnessed in the past couple of weeks, has been part of the reason for the hike in the price of inputs producers’ use, as most of our inputs are imported. In as much as there are external factors affecting prices in Ghana, government needs to do its part to check the high price increases.”
“Now, the fact that importers of finished products are having to incur a lower cost of doing business, than those that have to import and manufacture, makes it unfriendly to produce locally. Very soon you may witness an increase in the importation of finished goods, and a decrease in the production of products locally, and that is certainly not good for Ghana,” he added.
Mr. Tsonam Cleanse Akpeloo further charged government to review some taxes affecting producers, while taking a second look at the revised benchmark discount values policy as it makes it cheaper to import than produce in Ghana.
The producer inflation for the manufacturing subsector, which constitutes more than two-thirds of the total industry, increased by 7.2 percentage points to 36.0%.
Two out of the sixteen major groups in the manufacturing sub-sector recorded inflation rates higher than the sector average of 36.0%.
“The producer inflation rate in the petroleum subsector was 31.0% in March 2021. The rate decreased to 28.0% in April 2021 and subsequently fluctuates to 25.3% in August 2021.
“Thereafter, it increased continuously to 58.4% in November 2021 but dropped to 35.0% in January 2022. In February 2022 the rate increased to 44.3% and inched up to 67.4% in March 2022,” said the GSS.
According to a GSS, in March 2021, the producer price inflation rate for all industries was 13.0%. The rate decreased to a record 10.9% in April 2020 but increased to 11.8% in May 2021.
The rate decreased continuously to a record 8.1% in August 2021. However, since that time, the PPI has been on an upward trend reaching 29.3% in March 2022.
PPI measures the average change over time in the prices received by domestic producers for the production of their goods and services.
