BoG Predicts 9.2% End of Year Inflation

19 Jul
BoG Predicts 9.2% End of Year Inflation

With inflation-average change in price level expected to remain low till the end of the year, the Bank of Ghana has predicted an end of year inflation of 9.2 percent for this year.

This comes after the Bank of Ghana cut its policy rate-the prime rate from 15 percent to 13.5 percent on Friday. According to the Central Bank, the target would be achieved in part by lower food and petroleum prices as well as fiscal consolidation.

In its latest report on the economy released Friday by the Monetary Policy Committee (MPC) of the Bank of Ghana, the committee said it did not expect a significantly altered path of inflation in the second half of 2010.

“The inflation outcome for June 2010 captured the first round impact of the utility price adjustments announced at the end of May 2010. The second round effect is expected to work its way through the consumer basket in the second half of the year.”

The report stated that the anticipated slowdown in inflation in the medium-term, together with the need to restore the growth process, provided scope for monetary policy easing.

The drop in the prime rate by a 150 basis points was the third consecutive fall after the Central Bank cut the rate from 16 percent to 15 percent in April 2010. It is expected to reduce the cost of borrowing.

According to June 2010 figures released by the Ghana Statistical Service (GSS), food inflation inched up to 6.13 percent from 4.69 percent in May 2010, while the non-food inflation eased from 14.98 percent to 11.89 percent.

Alcoholic beverages, tobacco and narcotic; hotels and restaurants, recreation and culture in the non-food subgroup, and sugar, jam, honey, syrups, chocolate and confectionery; mineral water, soft drinks and juices recorded the highest inflation similar to that of March, April and May 2010.

Six out of the 11 sub-groups under the food component recorded inflation rates above the national average while vegetables including potatoes and other tubers, fish, bread, cereals and oil and fats recorded inflation below the national average.

Again, six out of the 11 sub-groups under the non-food component with an inflation rate of 55.09 percent, recorded an inflation rate that was higher than the national average. Health and communications recorded negative inflation rates.

Once again, Eastern Region recorded a single digit inflation of 0.98 percent compared with 3.58 percent in May 2010 followed by Greater Accra Region with 6.6 percent inflation (12.68 for food and 3.20 for non food). Ashanti and Northern regions followed suit, recording single digit inflations of 7.98 and 9.08 percent respectively.

Source: Daily Guide

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Posted by on 19 July, 2010 in BUSINESS, GHANA


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