Inflation Ends Third Quarter Falling to a One-Year Low

After last month’s unexpected and sharp decline in the consumer price index, the inflation rate ticked lower yet again at the end of the third quarter of the year in what appears to be a gradual ease of pressures on consumer prices. The annual inflation reading plunged to its lowest in twelve months to print at 38.1% in September, having eased down by 200 basis points from 40.1% in the previous month.

The decline was supported by both food and non-food inflation items which similarly saw some declines despite an uptick in the month-on-month inflation reading. The recent slowing trend observed in the consumer price index path has largely come on the back of a relatively stable local currency supported by calm in food prices and as the prices of petroleum products see some marginal declines. Month-on-month inflation printed at 1.9%, having risen from last month’s deflationary figure of 0.2%.

Food inflation underwent its second consecutive dip in September with a decrease from 51.9% in August to print at 49.4% this month. Month-on-month food inflation rose to 1.6% in September from a deflation figure of 0.3% in August. A key mover in the food inflation category was Tea & other plant products which registered an annual inflation jump of 117.1%, nullifying month-on-month deflation numbers of 1.4% and 0.8% from the Oils & fats and Cereals & cereals products sub-group.

A jump from -0.2% to 2.1% in the month-on-month inflation reading between August and September had minimal impact on the annual inflation figure for the non-food inflation category as this category saw its annual rate decline to 29.3% in September from 30.9%. Three out of the twelve sub-group items in this category recorded rates above the group’s annual inflation figure.

Across the regions, the inflation rate hovered from 31.2% in the Ashanti region to 54.4% in the North East region. Inflation on imported items at 39.9% reclaimed its dominance over that on local items at 37.3% this month having both risen from 36.2% and 42.4% respectively in August.

As anticipated, the last Monetary Policy Committee meeting saw the prime rate held steady in light of the recent development in the consumer price index. It is expected that the committee will continue to act cautious at its November sitting as the recent decline in inflation may be only transitory.