Inflation rises for first time since February 2021; now at 7.8%

Ghana’s national year-on-year inflation rate has once again taken an upward turn, albeit marginally, after two months of consecutive drops, to hit 7.8 percent in June 2021.

This increase is 0.3 percentage points higher than the 7.5 percent recorded in May this year.

Inflation is often referred to as a “measure of the increase in the price of goods and services over time”.

It reflects an increase or reduction in the purchasing power of money.

According to figures from the Ghana Statistical Service, increases in food prices and transportation contributed mostly to the overall rate of inflation.

Month-on-month inflation between May and June 2021 was 1.3 percent; 0.5 percentage points higher than what was recorded in May.

The inflation rate in June 2021 comes at the first time Ghana’s CPI has risen since February this year.

After staying stable at 10.3 percent in February and March, the inflation rate dropped consecutively in April and May, before rising marginally to 7.8 percent.

The current figure however remains within the Bank of Ghana’s targeted band of inflation of 8% plus or minus 2 percent.

Regional Inflation

At the regional level, the overall year-on-year inflation ranged from 1.1% in Western Region to 12.5% in Greater Accra Region.

Upper West Region recorded the highest month-on-month inflation (4.4%).

Three regions saw a stark decline in food inflation as compared to last month.

Western Region went from 0.4% to -1.1%, Volta from 9.8% to 8.0%, and Upper East from 7.8% to 6.0%.

Food and Non-Food Inflation

Food inflation (7.3%) was higher than the previous month (5.4%) but lower than the average of the previous 12 months (10.8%).

However, food contribution to inflation increased from 32.3% to 41.8%. Overall month-on-month food inflation was 1.8%, which is above the average month-on-month inflation.

Fish and other seafood was the only subclass that recorded a negative month-on-month food inflation. Ten non-food divisions recorded positive month-on-month inflation of max 3.1%.

Unlike food inflation, non-food year-on-year inflation on average went down this month compared to last month (from 9.2% to 8.2%). Out of the 13 divisions, ten had lower or equal year-on-year inflation in June 2021 than the rolling average over the last 12 months.

Housing, Water, Electricity, Gas and other fuels are the non-food division that recorded the biggest difference compared to the 12-month average (11.2% compared to 21.1%).

Transport recorded relatively high inflation (13.4%) this month compared to the rolling average (8.2%).

Source: Ghana Business

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