Government says drop in inflation, fuel prices sign of better days ahead

Business News of Sunday, 16 December 2018

Source: Myjoyonline.com

2018-12-16

play videoDeputy Information Minister, Pius Hadzide

Deputy Information Minister, Pius Hadzide, has said the government is committed to further reducing the hardships of Ghanaians inherited from the previous administration.

“Two major recent interventions which we expect will further reduce the legacy burden on Ghanaians are the further drop inflation to 9.3% and an expected further reduction in fuel prices this week.

“Inflation has seen a continued fall since January 2017. It has dropped from 15.4% in Dec 2016 and is now at a 6 year low of 9.3%. What this means is that if in Dec 2016 the prices of goods and services was increasing at 15.4 % (Annual Progress Report, 2016), now through the policies of the administration, the rate of price increases has slowed down to 9.3% enabling Ghanaians to retain more money in their pockets and reduce their hardship,” the Deputy Minister said.

He made the comment in Accra last week during the biweekly ‘Meet the Press’ encounter.

He said specific measures such as fiscal consolidation, monetary policy tightening, relative exchange rate stability for the most part of 2017 as well as easing inflationary pressures have been implemented to deal with the higher rate of inflation the government inherited.

These measures, he said, yielded results by reducing the headline inflation from 15.4% in December 2016 to 11.8% in December 2017. ( Mid-Year Budget Review, 2018) Thus, a 3.6% reduction.

‘These prudent measures were again steadily implemented in the 2018 fiscal year and this accelerated the disinflationary trend experienced in 2017. From headline inflation of 11.8% in December 2017 the trend was further dragged down within the first five months of 2018 to 9.8% (May 2018). Owing to the competence of the economic managers, in October 2018, the inflation rate further declined to 9.5%. Although there were slight increases in the ensuing months after May, the managers were able to direct it back on track,” he said.

According to Mr Hadzide, the most recent decline is the further reduction in November 2018, from a rate of 9.5% in October 2018 to 9.3% in November the same year.

“This is the lowest rate of inflation recorded since 2013. The general price level has therefore comparatively seen more stability in the last 2 years. In other words, the rate at which the purchasing power of consumers is reduced due to inflation is has been kept under control.

“Fuel prices which have also been experiencing an uptick over a two month period have also been on a gradual decline in recent weeks. Indeed government expects a further drop in fuel prices by an average 5.8% reduction for petrol, 4.8% reduction for Diesel and 2.46% reduction for LPG. This is occasioned by the marginal strength of the cedi and prices around the world,” he said.

He mentioned four interventions that according to him have been designed by the Nana Addo Dankwa-Akufo-Addo government to bring relief to Ghanaians:

– Reduction in some 14 tax handles in 2017

– Reduction in electricity tariffs

– Reduction in taxes on petroleum products from 40 to 26%

– Taking up of senior high school fees by government

“The administration is optimistic that the drop in inflation and fuel will therefore add another layer to the work being done in these first 24 months to ease the legacy burden on Ghanaians,” he said.

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