Inflation Rate Climbs to 9.0% in July

The rate of inflation rose for the second consecutive month in July as prices of food items, utilities, and transport mounted an upward pressure on consumer prices. The inflation rate for July was reported at 9.0% up from 7.8% in June representing the biggest upward jump so far in 2021. Despite the climb in July’s inflation rate, on a year-on-year basis the rate of inflation weakened by 240 basis points from 11.4% in July, 2020.

According to data released by the Ghana Statistical Service, inflation for locally produced items continued its dominance over that of inflation for imported items mainly as a result of price hikes in staples amid a relatively stable local currency. Price increases in the traditionally low-inflation zones of the three northern regions also contributed to the jump in July’s inflation reading.

Food inflation rose for the second consecutive time this month to 9.5%, the highest since March, 2021. Tea and other plant products recorded the highest inflation rate in this category at 14.4% in July, up from 12.9% last month. Water recorded its first positive figure at 0.2% after trending in the negative ranges since December last year.

Inflation on non-food items ended two months of a downward reading as the inflation rate for the group rose from 8.2% in June to 8.6%. Housing, water, electricity & gas at 14.1% and transport at 12.1% were the only sub-group items with rates higher than the group’s average inflation rate.

Across the regions, the dynamics changed as Greater Accra’s persistent record of highest inflation over the past sixteen months was halted.  The Upper West region recorded the highest inflation at a rate of 13.8% while Eastern region recorded the least rate at 3.0%. Inflation on local goods further rose to 9.4% whilst that on imported goods came in at 7.1%.

At the last Monetary Policy Committee (MPC) sitting, the committee recognized the presence of risks to the inflation outlook arising from fiscal pressures. The committee after assessing that the risks to inflation and growth were broadly balanced kept the policy rate unchanged at 13.5%. The persistence of upward price pressures is likely to force the MPC to stay on its cautious stance.