Inflation Rate end 2019 at 7.9%

The year-on-year inflation rate dipped from a 4-month high to close 2019 fiscal year at 7.9%. It declined by 30 basis points (bps) from 8.2% recorded in November, 2019. The dip in consumer prices in the last month of the year means that the government met its end of year inflation target of 8.0%. On a month-on-month basis, inflation rate between November and December, 2019 came in at 0.3% from 0.7% in the previous month.

According to data released by the Ghana Statistical Service (GSS), inflation on imported goods declined sharply from 7.5% in November to 6.1% in December, while that on local goods rose for the fourth consecutive time from 8.4% to 8.7% within the same period. The data further revealed that inflation was predominantly driven by food, transportation, and housing expenses.

The Food and non-alcoholic beverages group recorded a year-on-year inflation rate of 7.2%, down from 8.4% in November mainly on the back of a significant drop in the inflation figures for tea products and vegetables. Six subgroup items including ‘fruits and nuts’ at 15.0% recorded rates above the group’s inflation rate while nine other subgroup items including ‘tea and plant products’ at -0.9% recorded rates below the group’s rate.

The inflation rate for the Non-food and alcoholic category posted a 50 bps jump from 8.0% in November to 8.5% in December. ‘Alcoholic beverages & other narcotics’ and ‘transport’ at 13.5% and 11.0% respectively recorded rates above the group’s inflation rate. ‘Insurance and financial services’ at 0.6% were among nine others that recorded rates below the group’s inflation rate.

At the regional level, the Greater Accra region recorded the highest inflation with a rate of 12.0% while the Upper East region recorded the lowest at a rate of 5.2%.

Despite the drop in the consumer price index, the Monetary Policy Committee of the BoG will be expected to continue to take a cautious stance in announcing policy rates in 2020 as the nation heads to the polls. Election years in Ghana are often characterized by fiscal overruns which mostly erode macroeconomic gains made.