Business News of Saturday, 22 September 2018
The Producer Price Inflation (PPI) rate for August this year has decreased to seven per cent.
This represents a 1.2 percentage point decrease relative to the rate of 8.2 per cent recorded in July of the same year under review.
PPI measures the average change over time in the prices received by domestic producers for the production of their goods and services.
It reports the indices with reference point to September 2006 as the base period.
Reasons for the decline
At a news conference in Accra last Wednesday to announce the new PPI, the acting Government Statistician, Mr Baah Wadieh, attributed the drop in inflation from producers’ perspective to the decrease in manufacturing, mining and quarrying sub-sectors which recorded inflation rates of 10 per cent and 1.9 per cent respectively.
“Inflation in the mining and quarrying sub-sector decreased by 5.6 percentage point over the July 2018 rate of 7.5 per cent to 1.9 per cent in August this year.
The inflation for the manufacturing sub-sector which constitutes more than two-thirds of total industry also decreased by 0.4 percentage points to 10 per cent in August 2018,” he explained.
He added that those sub-sectors recorded the decrease due to the fall in the prices of gold, refine petroleum products, and manufacturing of wood products.
Mr Wadieh said the decrease for both sub-sectors were affected by base drift effect – the distortion in a monthly inflation figure that is as a result of abnormally high or low levels of inflation in the same period a year ago.
“The base used to calculate the inflation in the present year in relation to the prices in the corresponding period of the previous year was high, and this resulted in the based drift effect,” he said.
Mr Wadieh said the manufacturing sub-sector recorded the highest year-on-year producer price inflation rate of 10 per cent, followed by the mining and quarrying sub-sector with 1.9 per cent.
The utilities sub-sector, however, recorded the lowest year-on-year producer inflation rate of negative 0.2 per cent, indicating no change in inflation from the previous month, he added.
With respect to inflation rates in the major groups in the manufacturing sector, three groups: manufacturing of coke and refined petroleum products, manufacturing of basic metals and manufacturing of textiles recorded inflation higher than the average group rate of 10 per cent.
Manufacturing of coke and refined petroleum products and nuclear fuel recorded the highest inflation rate of 41.6 per cent while manufacturing of other non-metallic material products recorded the lowest rate of negative 0.5 per cent in August 2018.