Economist Professor Godfred Bokpin has predicted of a drop in inflation to single digits in the short to medium term.
It follows what he describes as weak volatilities with the main price drivers of inflation such as utility prices and transport fares.
“As a result the major drivers do not exhibit higher volatility going forward and for which reason I think the threat of inflation are not significant,” he said.
“If you look at the projections, it looks quite likely that we will be entering the zone of single digit inflation anytime from now and for that reason we need to orient the policy framework towards that as well,” Professor Bokpin added.
Ghana’s inflation currently stands at 15.4 percent.
The figure dropped three consecutive times from 17.2 percent in September 2016.
The country started 2016 with an inflation of 19 percent; increasing to 19.2 percent in March and further increasing to 18.9 percent in May and subsequently 17.2 percent in September (though there were some marginal reductions in between those periods).
At the last announcement by the Ghana Statistical Service, Acting Government Statistician, Baah Wadieh attributed the Transport (27.2%), Education (23.4%), Recreation and culture (20.3%), Housing, water, electricity, gas and other fuels (20.2%), Furnishings, household equipment and routine maintenance (18.8%) and Health (18.5%).
The “price drivers” for the food inflation rate were Meat and meat products (15.0%), Coffee, tea and cocoa (14.0%), Fish and sea food (13.9%), Mineral water, soft drinks, fruit and vegetable juices (12.2%), Sugar, jam, honey, chocolate and confectionery (12.0%).
The central bank is also optimistic of achieving a single digit inflation of 8 percent plus or minus 2 by the third quarter of this year.
Professor Bokpin further explains to Citi Business News the drop in inflation should cause interest rates to drop.
“I think that if you look at the last three months or so, you will see a little bit of disinflation taking place; the relative stability of the cedi and the impact of the elections but we haven’t seen a lot of adjustment in terms of utility prices and transport fares.”
“Inflation has come down significantly…I do not think that the development will pose a significant risk to inflation to which reason the BoG will decide to maintain the policy rate or increase it,” Professor Bokpin stressed.
By: Pius Amihere Eduku/citibusinessnews.com/Ghana