President John Dramani Mahama has disclosed that his government is targeting 12% inflation by the end of 2016.
In an interview on Radio BAR as part of his ‘Accounting to the People Tour’ in the Brong Ahafo Region, Mr Mahama stated that: “inflation has started slowing and we expect that by the end of the year, it will come down from 18% to about 12% or 13% and next year, we expect it to go into a single digit”.
Inflation is a change in the general price level of goods and services in an economy over a period of time. When the price level rises, each unit of currency buys fewer goods and services.
According to Mr Mahama, “when the economy is stable and inflation is coming down, it ensures that the erosion of income in your pocket slows”.
Mr Mahama said his administration has reduced the Deficit-to-GDP ratio to below 7.6%, from the 12% he inherited in 2012.
He indicated in an earlier interview on Sunrise FM on April 14 that this year, “we are going to bring it [Deficit-to-GDP ratio] down to 5.3%, then it means that inflation will gradually come down; we are looking to bring inflation back down to a single-digit, then once inflation is coming down, then interest rates will gradually follow, and, so, the prospects look very good and I am very bullish about the Ghanaian economy.”
The Ghana Statistical Service (GSS), on Wednesday April 13 announced that inflation for March hit 19.2 per cent, up from 18.5 in February.
The figure for the last month of the first-quarter of the year represents the greatest value for inflation since August 2009, mainly thanks to a rise in the cost of transportation.
Prices of transport jumped from 30.4 per cent to 40 per cent in March, in addition to clothing and footwear (19.4 per cent to 21 per cent) for the same period.
Government Statistician, Dr Philomena Nyarko, said utilities also accounted for the sharp rise in inflation.
The Public Utilities and Regulatory Commission (PURC) increased electricity and water tariffs in December 2015 by 59.2 per cent and 67.2 per cent, respectively, while transport fares saw a 15 per cent hike in February owing to the introduction of the Energy Sector Levy.
In an interview with the media, Dr Nyarko said: “We are saying that the major reason why we are seeing this increase is as a result of transport, housing, water, electricity, education, and recreation and culture, which are the major drivers when it comes to the non-food sector. But when we take the food items, you are looking at the mineral water, fruits and vegetables, soft drinks, food products elsewhere classified, among others, which were for the food group. The reason you can attribute to this increase is the increase in transportation fares in February 2016 by about 15% which affected some of the prices.”
As of December 2012, Ghana had experienced single-digit inflation for 31 months, with that of December that year being 8.8%.