Inflation Rate for June, 2019 Drops to a 5-Month Low

Consumer prices posted its second consecutive decline in June after a marginal dip in May. The rate of inflation fell by 30 basis points (bps) from 9.4% in May to 9.1% in June, its lowest since January, 2019. Year-on-year, the rate of inflation fell by 90 bps from a reported rate of 10.0% same time last year.

The inflation rate has remained in the single digits over the past year in line with the government’s medium-term inflation target band of 8.0% ± 2.0%. The dip in June’s inflation reading gives an indication of a move towards the government’s projected year-end inflation target of 8%.

Data released by the Ghana Statistical Service (GSS) indicated that the dip came on the back of relatively stable prices of food and non-food inflation items following a drop in the prices of petroleum products as well as increased output of agricultural produce.

The Food and non-alcoholic beverages group posted its third consecutive decline in June as it fell from 6.7% in May to 6.5% June. It recorded a year-on-year inflation rate of 6.5%, down by 20 bps from a reported rate of 6.7% in May. ‘Milk, cheese & eggs’ recorded the biggest month-on-month decline as it fell from 3.7% in May to 3.3% in June. Five sub-groups, including ‘coffee, tea & cocoa’ at 18.0% were above the group’s inflation rate while six sub-groups posted rates below the group’s inflation rate.

The inflation rate for the Non-food and alcoholic group reversed previous months tightening as it fell from 10.6% in May to 10.3% in June. This came on the back of a 560 bps drop in ‘Transport’ sub-category which declined from 12.5% in May to 6.9% in June. Four sub-groups, including ‘Clothing & footwear’ at 15.2% recorded rates higher than the group’s inflation rate while seven other sub-groups, including ‘Education’ at 6.2% also recorded rates below the group’s inflation rate.

At the regional level, Upper West region recorded the highest inflation with a rate of 11.1% while Upper East region recorded the lowest at a rate of 8.3%.

After stalling the monetary policy rate at 16.0% in its last sitting for the second consecutive time despite a 50 bps cumulative rise in consumer prices, the Monetary Policy Committee (MPC) is expected to take a cautious stance in its policy rate announcement later in the month. The MPC is likely to cut the policy rate to drive down the cost of credit or to stall the policy rate to check portfolio outflows.