Ghana’s June inflation drops to 9.1%

Ghana's June headline inflation came in at 9.1 per cent, compared to the 9.4 per cent recorded in May. John Gachi, Head of the Finance Department at the University of Cape Coast (UCC), provided insights on the implications of these figures for Ghana's economy. The slight decrease in the inflation rate indicates a marginal drop in price levels, but Gachi cautioned that recent developments such as increasing tariffs for water, electricity, and fluctuating fuel prices could offset this decline. He highlighted the potential upward trend in overall inflation in the future. When discussing the food index, Gachi pointed out the positive impact of neighboring countries producing agricultural goods for Ghana. This, coupled with Ghana's own efforts to boost agricultural production, has led to some improvement in food price inflation. However, Gachi noted that initiatives like the new living income differential for cocoa farmers may not significantly affect inflation due to the limited consumption of cocoa by Ghanaians. Instead, such initiatives could boost exports and stabilize the currency. Gachi also touched upon the fiscal and monetary policies in Ghana, mentioning that while inflation has remained in the single digits, fiscal management, including significant borrowing, poses risks to inflation and currency stability. He expressed concerns about the high foreign currency debt level in Ghana and its impact on the country's economic outlook. The depreciation of the Ghanaian Cedi, which has appreciated by about 8% as of June, has raised prices of imported goods, leading to inflationary pressures. Gachi highlighted the negative effects of currency depreciation on prices and debt levels, emphasizing the need for prudent economic management to mitigate these challenges.