The consumer price index posted its first decline in the year after three months of continuous tightening. The inflation rate for May, 2019 was reported at 9.4%, down marginally from 9.5% recorded in April, 2019. This was after the inflation rate cumulatively hardened by 50 basis points between January and April, 2019. Year-on-year, the rate of inflation fell by 40 bps from a reported rate of 9.8% same time last year.
Despite the strong pick-up in consumer prices in recent times, the inflation rate has largely remained in the single digits over the past year in line with the government’s medium-term inflation target band of 8.0% ± 2.0%. May’s inflation reading, however, is likely to give an indication of a move towards the government’s projected year-end inflation target of 8%.
According to data released by the Ghana Statistical Service (GSS), the decline came on the back of relatively stable prices of food and non-alcoholic beverages items after the marginal depreciation of the local currency failed to impact on perishable consumables.
The Food and Non-alcoholic beverages group posted a sharp decline in May, adding on to the previous month’s fall. It recorded a year-on-year inflation rate of 6.7%, down by 60 bps from a reported rate of 7.3% in April. ‘Fish & sea products’ recorded the biggest month-on-month decline as it fell from 7.1% in April to 5.9% in May. Five sub-groups, including ‘coffee, tea & cocoa’ at 15.1% were above the group’s inflation rate while six sub-groups, including ‘milk, cheese & eggs’ at 3.7% posted rates below the group’s inflation rate.
The inflation rate for the non-Food and alcoholic group rose marginally to 10.6% from 10.4% in April. This came after ‘health’ sub-group recorded the biggest monthly increase, from 5.9% in April to 7.1% in May. Four sub-groups, including ‘Recreation & culture’ at 15.0% recorded rates higher than the group’s inflation rate while seven other sub-groups, including ‘communications’ at 6.1% also recorded rates below the group’s inflation rate.
At the regional level, Upper West region recorded the highest inflation with a rate of 11.1% while Upper East region recorded the lowest at a rate of 8.0%.
After forcing a monetary policy stay despite a continuous rise in the inflation rate, the Monetary Policy Committee (MPC) is expected to continue to hold the policy rate at 16.0% in its next sitting if the next inflation reading remains supportive.