Graphic Business News

Statistical Service sees inflation retreating to single digit

By: Maxwell Akalaare Adombila

THE Ghana Statistical Service (GSS) is hopeful that annualised inflation will retreat to the single digit band in the coming months after panic buying in the run-up to the disinfection of markets and the partial lockdown caused the rate to jump to an eight-month high.

The Government Statistician, Prof. Samuel Kobina Annim, told the GRAPHIC BUSINESS that barring any imposition of restrictions in the future, year-on-year inflation should start easing from May to reflect the ‘extraordinary impact’ that the imposition of restrictions of movements in the Greater Accra Region and parts of Central and Ashanti regions had on prices in April this year.

“The effect in April was because of the mobility restrictions,” Prof. Annim said on May 13.

“With the ease in the mobility restrictions, we expect a reverse,” he said but added that the service could not tell the pace of the easing.

April rate
Prof. Annim was speaking to the GRAPHIC BUSINESS after the GSS released the April Consumer Price Index (CPI) on May 13, which showed that year-on-year inflation had risen to 10.6 per cent from 7.8 per cent in March.

The data showed that the spike in the rate for April was caused by record hikes in prices of items in the food and non-alcoholic beverages basket.

That basket, according to the data, accounted for almost 60 per cent of year-on-year inflation for April.

Following the rise in the rate, the Bank of Ghana’s (BoG) Monetary Policy Committee maintained its policy rate at 14.5 per cent, citing elevated risks to inflation.

The committee’s Chairman and the Governor of BoG, Dr Ernest Addison, said on May 15 that the April rate of 10.6 per cent was outside the central bank’s target band.

“The bank’s latest forecast points to elevated risks to the inflation outlook in the forecast horizon, underscored by the recent jump in headline inflation,” Dr Addison said during the press conference that was broadcast virtually.

"Following the rise in the rate, the Bank of Ghana’s (BoG) Monetary Policy Committee maintained its policy rate at 14.5 per cent, citing elevated risks to inflation."

Pace of easing
Prof. Annim said the spike in the inflation in the local items and the food and non-alcoholic beverages baskets reflected the impact that the partial lockdown had on prices.

This, he said, informed the belief that inflation would start easing from May now that the restrictions had been removed and the panic buying was no longer in existence.

He, however, explained that the public should not expect inflation to quickly retreat to the 7.8 per cent rate recorded between January and March as the extent of the easing would be dependent on the government’s future interventions to contain the spread of the virus.

BoG’s projection
But unlike the GSS, the BoG said the rise in the inflation would peak in the coming months before easing in December.

“The recent rise in inflation is projected to peak in the second quarter and begin to return to the disinflation path in subsequent quarters with inflation settling within the medium-term target band by the end of the year,” the Governor said.

When contacted, a former Head of Economic Statistics at the GSS, Mr Ebo Duncan, said he did not foresee price pressures moderating immediately although the pace of the rise would decline.