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In a statement issued by Abdul Hakim Ahmed, Media Liaison at the Ministry, said with the current levels of interest rates, the crop harvest season coming on stream and the cedi appreciating, the inflation rate is expected to continue to remain a single digit for the remaining period of the year.
It said the sharp decline in inflation also provided concrete evidence of an economy that is growing at a fast rate.
The Ghana Statistical Service (GSS) on Wednesday announced that October 2012 inflation rate stood at 9.2%, marking 29 consecutive months of single digit inflation rate in the country.
“This is in clear contrast to our critics who believe that inflation is likely to return to double-digit zone this year. Compared with the end-year inflation of 18.1% recorded in December 2008, the single digit inflation achieved in 29 consecutive months is indeed an unprecedented achievement,” the statement said.
It said although inflation rose during the first half of 2012, it still remained in the single digit zone.
The rise in inflation after initial declines in the early part of the year was driven mainly by the non-food sector, which was largely affected by the pass-through effect of the depreciation in the value of the domestic currency.
It said the depreciation of the Cedi was, however, stemmed after the government took decisive policy actions to respond to the build-up of pressures in the foreign exchange market.
Indeed, the cedi depreciated by 15% in the first 6 months of the year but by August it had appreciated by 3.3%. It is expected that the cedi will appreciate by 1% in the last quarter of the year. This means that the cedi will depreciate by 11% in 2012 compared to the depreciation of 26% in 2008.
The October 2012 consumer price index shows that inflation is on a downward trend even during an election year. The drop in inflation for three months running was mainly on account of the decline in food inflation, which dropped from 5.5% in July down to 4.1% in October. Non-food inflation similarly dropped from 12.5% in August to 12.2% in October.
The statement emphasized that the country’s economic fundamentals remain very strong.
“Improved macroeconomic policies, underpinned by prudent fiscal management and tight monetary policy has contributed immensely to the decline in both the fiscal deficit and inflation since 2008, while the strong build-up of gross foreign reserves has generally supported the stability of the value of the domestic currency,” the statement said.