The proportionate change in the general prices of goods and services consumed by households for the month of November has reduced to 9.8% according to latest data released by the Ghana Statistical Service. This indicates a 30-basis points reduction from the month of October 2020 and an increase in the Consumer Price Index (CPI) between November 2019 and 2020 though they both result in single-digit inflation figures.
This is the fourth consecutive time the month-on-month inflation has moderately declined since the third quarter of 2020. The current inflation rate indicates a return to single-digit inflation (year-on-year) since its last shot-up to 10.6% in April 2020 as a result of panic-buying following the announcement of a lockdown due to the Covid-19 pandemic.
According to the GSS, the contribution of Housing, Water, Electricity and Gas to the current inflation is the highest since rebasing was done in 2019 although Food remains a predominant driver of year-on-year inflation.
Housing, Water, Electricity and Gas contribution to inflation is 22.6% - this is “higher than all other Divisions and higher than on average between September 2019 and March 2020 (0.7%), but lower than the average in the months after COVID-19”. The Service attributes this to the increase in the rents and refuse disposal.
The declining inflation is gradually inching towards Bank of Ghana’s target of 8% which may cause the Monetary Policy Committee (MPC) to revise the current policy rate downwards during its next meeting scheduled to take place between 20 - 22 January, 2021.
However, a possible downward revision or otherwise would be largely dependent on the country’s prevailing deficit orientation.
Source: Sampson Kesse (Real Estate Times Africa)