Inflation Rate Begins 2020 at 7.8%

The consumer price index further trended downwards for the second consecutive time as it began the year with an inflation rate of 7.8%, down from 7.9% recorded in December, 2019. Year-on-year, the inflation rate dipped by 120 basis points (bps) from a rate of 9.0% recorded over the same period last year. The dip came on the back of a Cedi appreciation in January as well as a marginal decline in the prices of petroleum products.

Data released by the Ghana Statistical Service (GSS) indicated that inflation on imported goods declined for the third consecutive time as the Cedi showed signs of traction. Inflation on imported goods weakened from 6.1% in December to 5.8% in January, 2020 while that on local goods remained unchanged at 8.7% after months of posting increases. The data further revealed that food remained the major driver of consumer prices in Ghana.

The Food and non-alcoholic beverages group recorded a year-on-year inflation rate of 7.8%, up from 7.2% in December, 2019 as ‘fish and other seafood’ posted the biggest month-on-month increase. Eight subgroup items including ‘fruits and nuts’ at 15.4% recorded rates above the group’s inflation rate while seven other subgroup items including ‘tea and plant products’ at 0.1% recorded rates below the group’s rate.

The inflation rate for the Non-food and alcoholic category after recording a 50 bps rise last month, dipped by 60 bps from 8.5% in December to 7.9% in January, 2020. ‘Alcoholic beverages & other narcotics’ at 11.1% recorded rates above the group’s inflation rate. ‘Insurance and financial services’ at 0.6% were among ten others that recorded rates below the group’s inflation figure.

At the regional level, Central region recorded the highest inflation with a rate of 10.0% while the Ashanti region recorded the lowest at a rate of 5.6%.

At the last Monetary Policy Committee (MPC) meeting, the committee held the prime rate steady at 16.0% for the sixth consecutive time as the risks to the inflation and growth outlook were broadly balanced. Despite the relatively tamed inflation coupled with the Cedi’s appreciation, the MPC will be expected to continue to strike a cautious stance in its future policy rate decisions.