The rate of inflation failed to extend its downward trend for the third consecutive time as it rose slightly in July after ending the first half of the year dipping to its lowest in five months. The rate of inflation rose by 30 basis points (bps) from 9.1% in June to 9.4% in July. Year-on-year, the rate of inflation fell by 20 bps from a reported rate of 9.6% 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 government is, however, likely to miss its year-end inflation target of 8.0% after the government missed its fiscal balance in the first half of the year and requested an additional GHC 6.37 billion to spend in the second half of the year.
According to data released by the Ghana Statistical Service (GSS), the pick-up in consumer prices came on the back of increases in food and non-food inflation items following a rise in utility tariffs as well as the continuous marginal depreciation of the local currency against some of its trading partner currencies.
The Food and non-alcoholic beverages group recorded its first rise in four months as it rose from 6.5% in June to 6.6% in July. ‘Milk, cheese & eggs’ recorded the biggest month-on-month increase as it rose from 3.3% in June to 4.1% in July. Six sub-groups, including ‘coffee, tea & cocoa’ at 17.5% were above the group’s inflation rate while five sub-groups posted rates below the group’s inflation rate.
The inflation rate for the Non-food and alcoholic group also rose to recover from previous month’s dip. It surged by 40 bps from 10.3% in June to 10.7% in July mainly on the back of ‘Housing, water, electricity & gas’ which surged by 300 bps from 6.8% in June to 9.8% in July. Four sub-groups, including ‘Clothing & footwear’ at 14.9% recorded rates higher than the group’s inflation rate while seven other sub-groups, including ‘Education’ at 6.4% 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 8.5%.
The Monetary Policy Committee (MPC) at their last meeting in July took a cautious stance as they stalled the policy rate at 16.0% for the third consecutive time on risks resulting from fiscal imbalances. August inflation rate announcement will provide a guide for the next MPC meeting.