Ghana’s recent surge in inflation may not reverse immediately despite declining global crude oil prices and reductions in local fuel prices, as the economy continues to absorb the delayed effects of earlier fuel price increases.
This means that Ghanaian households and businesses anticipating the inflation rate to cool immediately may have to wait a little bit longer.
This is the assessment of Professor of Economics at the University of Ghana Business School, Prof. Patrick Asuming.
His comments come after Ghana’s headline inflation rate unexpectedly climbed from 3.7 percent in May to 5.3 percent in June, interrupting months of sustained disinflation.
According to Prof. Asuming, the latest inflation data suggests that higher fuel prices recorded in previous months are now filtering through the broader economy, particularly in transport and other fuel-related expenditure categories.
“When you look at food versus non-food, you see that there have been increases across the board,” he observed. “Transportation recorded one of the biggest increases, while the category that includes other fuels also rose significantly. We are beginning to see the expected pass-through effects of the recent fuel price adjustments,” he added.
Although international crude oil prices have retreated to levels seen before the recent Middle East tensions and domestic fuel prices have also started declining, the economist cautioned that inflationary pressures are unlikely to ease immediately.
He explained that changes in fuel prices typically take time to work through production, transportation, and distribution costs before affecting consumer prices, meaning the impact often persists even after fuel prices begin to fall.
‘July may be a little too early,” Prof. Asuming noted. “It took some time before we started seeing the pass-through effects of the earlier fuel price increases, so there is likely to be some momentum. The inflationary pressures may linger for a while.”
However, he expressed cautious optimism that if global oil prices remain stable and no new external shocks emerge, inflation could begin moderating from August.
“If nothing else happens, we might begin to see those effects receding and gradually return to the price trends we observed before the recent geopolitical tensions,” he said.
Prof. Asuming’s assessment suggests that while falling fuel prices provide relief, the transmission of earlier cost increases through the economy means businesses and consumers may have to wait several more weeks before experiencing meaningful reductions in non-food inflation.
