Inflation Rate Soars to 18-Year High in April

The continued and sustained pressures on consumer prices exacerbated, pushing the rate of inflation to its highest in more than 18 years and the highest since the consumer price index was rebased with 2018 as the reference period. April’s inflation rate printed at 23.6%, up from 19.4% recorded in March.

Data released by the Ghana Statistical Service revealed that 295 inflation items out of the 307 items in the inflation basket recorded price increases with 99 items experiencing price increases in excess of the national inflation figure. This comes as significant increases in the costs of petroleum products and transport fares push producers and distributors to adjust the prices of their goods and services upwards. The data also revealed that for the first time in more than 2 years, imported inflation exceeded that of domestic items. We expect inflation to continue to remain anchored in the double digits as the underlying risks to the inflation outlook linger.

Food inflation rose for the third consecutive time in 2022, climbing up from 22.4% in March to 26.6% in April despite its contribution to the national inflation posting a decline from 51.4% in March to 50.0% in April. Fourteen out of the fifteen subgroup items recorded increases from last month’s rate with water coming in with the biggest inflation rate of 42.1% after jumping from 28.2% in March.

Inflation on non-food and alcoholic beverages jumped up by 430 basis points from 17.0% in March to 21.3% in April. Four subgroup items including transport at 33.5% and household equipment & maintenance at 28.5% recorded rates higher than the group’s average inflation.

Across the regions, the inflation rate hovered between 18.4% in the Upper East region and 26.7% in the Central region. The inflation rate on imported goods posted the biggest increase from last month’s rate of 17.3% to 24.7% whilst that on local goods rose from 20.0% in March to 23.0%.

As the monetary policy committee meets later in the month to review recent developments in the economy in order to position the policy rate to tame the rapid surge in the inflation numbers, the dilemma will be to leave the policy rate unchanged as the drivers of inflation have mainly been as a result of cost-push inflation or to follow the path of most central banks to hike rates.