Inflation Now 9.52% ...It's the lowest in 3 years ( Thursday, July 15, 2010, Front page)

Ghana’s economy has achieved its lowest inflation figure in three years, having recorded a figure of 9.52 per cent for the month of June 2010.

Inflation dropped closer to that figure in December 2007 when the rate closed at 12.75 per cent.

The latest release represents a drop of 1.16 per cent from the previous month’s 10.68 per cent and also follows a consistent pattern in which the figure has been dropping over the last 12 months.

The Government Statistician, Dr Grace Bediako, who announced this at a news conference in Accra yesterday, fell short of admitting that the figure was a single digit inflation, although the government thinks otherwise.

The rate of inflation has been falling for 12 consecutive months and the largest decline in 2010 was recorded when it dropped by 1.66 percentage points, followed by the January drop, which was 1.19 percentage points.

The other months recorded declines below one percentage point and the cumulative decline between January and June 2010 is 5.26 percentage points from 14.78 to 9.52 per cent.

Dr Bediako explained that although the prices of food were rising, the phenomenon was much slower and, therefore, it could translate to some savings for workers.

With the food season now in sight, the future rate of inflation might ease, no matter how marginally, the Government Statistician stated.

On the impact of the recent increases in utility tariffs on the rate of inflation, she stated that “the weight of utility tariffs in the entire computation of the inflation rate is virtually insignificant because it carries a weight of less than two percentage points”.

“This, will, therefore, not have any impact on inflation figures and it is not likely to affect future rates to be announced,” she added.

She indicated that the Single Spine Salary Structure (SSSS), which was expected to see a rise in the pay cheques of some public sector workers, would not bring about increased inflation, at least not in the short term, adding that those to benefit were not many and their purchasing power could not change the trend.

“The food and non-alcoholic beverages group has been recording a single digit inflation rate since January 2010, falling from 9.08 per cent to 4.69 per cent in May 2010 and increasing to 6.13 per cent in June 2010,” Dr Bediako explained.

The non-food inflation rate, on the other hand, though declining, had been recording double-digit inflation rates.

She said in the food group, which had a weight of 44.91 per cent, sub-groups with the largest inflation rates were sugar, jam, honey, syrups, chocolate and confectionery, which recorded 29.02 per cent, with mineral water, soft drinks and juices recording 24.90 per cent.

For the non-food rate of inflation, which accounts for 55.09 per cent of average household expenditure, Dr Bediako said that had five out of 11 of its sub-groups recording inflation rates above the group average of 11.89 per cent.

Meanwhile, responding to the figures announced, the Minister of Finance and Economic Planning, Dr Kwabena Duffuor, said the single digit inflation rate announced was refreshing news and said the stabilisation programme was on course and all targets set were within reach in just about 18 months of the Mills administration.

To him, the current rate of inflation, as announced yesterday, was a major achievement that would bring widespread economic benefits to Ghanaians to do business.

He said high inflation undermined macroeconomic stability and made sustained rapid growth impossible to achieve.

“As a result of this, getting to an inflation rate of 9.52 per cent is an impressive turn around in such a short time,” Dr Duffuor added.

He said the chronic fiscal imbalances of 2008 resulted in persistent inflation over the last two years.

“The government is, therefore, committed to implementing policies that will ensure a lowering of domestic interest rate and a reduction in exchange rate volatility to enhance business confidence,” he added.

Dr Duffuor said the government’s objective of gradually moving to an overall fiscal balance would also help strengthen the macroeconomic policy framework and free resources for essential infrastructure and other programmes.

“It is, therefore, important that we focus on the target we have set for ourselves in the 2010 Growth and Stability Budget,” he added.

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