In a surprise turn of events, the consumer price index inched up in May contrary to the growing expectations of easing price pressures on the back of a stabilizing Cedi. The annual inflation rate reversed its recent downward trajectory, posting its first increase in five months to support earlier warnings of the central bank about the prevalence of upward price pressures on consumer goods and services. The annual inflation rate was accordingly reported at 42.2% in May, edging up by 100 basis points from 41.2% reported in April.
The increase in the annual inflation reading was supported by a significant jump in the month-on-month inflation figure which came in at 4.8% in May, having risen from 2.4% in April. The renewed price pressures on consumer goods come after the Cedi failed to hold onto its recent gains, causing prices on imported items to inch up marginally and as prices on petroleum products recorded marginal increases. The general price levels are expected to remain elevated following the upward review in utility prices and as new tax measures begin to take effect.
The share of food inflation to the national inflation basket went up for the third consecutive time at 52.9% in May to surpass the share of non-food inflation as food inflation rose from 48.7% in April to print at 51.8% in May. Month-on-month food inflation printed at 6.2% in May, up from 4.3% in April buoyed by a 19.4% jump in the monthly inflation reading for Tea & related products.
Inflation on non-food items extended its downward trend to print at 34.6% in May, down from 35.4% in April. Month-on-month inflation on non-food & alcoholic beverages, however, rose to 3.5% in May from 0.7% in April driven by 7.0% and 5.7% inflation figures for furnishings & household equipment and alcoholic beverages & other narcotics items.
Across the regions, the inflation rate hovered from 31.0% in the Ashanti region to 62.5% in the Western North region. Whilst inflation on locally produced items extended its dip to 36.2%, that on imported items rose by 70 bps to print at 43.8% in May.
The May sitting of the Monetary Policy Committee (MPC) saw the MPC hand down its first policy stay in nearly one year on signs of easing price pressures on consumer goods. The renewed price pressures if sustained will be expected to drive the MPC to continue its tougher stance against inflation.