Economist Dr Joe Abbey has said the government cannot claim credit for the decline in inflation announced Wednesday because some external factors accounted for the drop.
“Before you can give credit, you must be able to identify where the influence is coming from; the influence is not from policies, the influence is coming from imports. If you look at commodities on the international market, it is a matter of some pleasant surprise that the main thing is coming from vegetables including potatoes bread and cereals – these are not things our policies are responsible for,” he said.
Dr Abbey, who is also the Executive Director of the Centre for Policy Analysis (CEPA), said the government cannot spurn responsibility for the increase in fuel prices – arguing it was as a result of increases in world market price of crude oil – and seek to claim credit for the drop in inflation which was triggered by a reduction in the prices of vegetables on the international market.
“We need to be very careful about rushing to assign credit or discredit. I think what is happening is that we are seeing in our inflation, the other side of what we are seeing in respect of oil – we are seeing outside forces having strong influence on price development in Ghana. We have seen oil threatening to have an upward effect on domestic inflation and we see potatoes and bread and other cereals having a positive effect on inflation. I think both of these are outside the control of the government,” he explained to Joy Business’ George Wiafe.
The economy recorded an end-of-year inflation figure below 9 percent, much better than government set out to achieve. December’s 8.58 percent is nearly 70 percentage points better than the 9.2 percent target government set itself.
The Head of Economic Statistics at the Ghana Statistical Service, Ebo Duncan explained to Joy Business the food component of inflationary pressures largely accounted for the drop in inflation for the month of December.
“The food especially brought the whole inflation down because if you look at the non-food, it is still high and is at 11.22%, though it also came down slightly…but if you take the food, it came to 4.5% while in November it was above 5 per cent closer to 6 per cent so the food will continue to exert a lot of downward pressure on inflation,” he said.
The December 2010 rate remains the lowest since June 1992. Inflation for the previous month was 9.08 percent. On the regional level Greater Accra recorded an inflation figure of 13.05 percent the highest amongst the regions.