The widespread claims that Ghana’s inflationary pressures are mostly driven by the importation of foreign-made goods (food and non-food) are not supported by data.
Between January and July 2024, prices of goods and services continued to increase although on a downward trend. Beyond the continuous increase in prices of goods and services, the widespread assertion that what drives the rise in prices are the imported products which are mostly affected by the depreciation of the cedi.
This has been the assertion by many government communicators even including senior officials of the administration.
However, a trend analysis conducted by The High Street Journal using CPI data from the Ghana Statistical Service has emphatically debunked such claims at least for the period reviewed which is the first half of 2024.
Inflation in Ghana from January 2024 to July 2024 has been consistently mainly driven by locally produced items. For the period under review, inflation for locally produced items has always been above inflation for imported items.
Let’s take a look at the trend from January to July of this year;
In January, inflation for locally produced items was 24.2% slightly higher than that of imported items which was 22%.
The gap even widened in February when inflation for local items slightly increased to 24.6% as imported items rather declined to 20.1%.
In March, both local and imported experienced an increase. However, inflation for local goods stayed above with 26.6% while imported items was at 23.8%.
The trend reversed for both in April, but still, local inflation remained higher at 25.7% while imported slightly dropped to 23.5%.
In May, while local inflation remained relatively stable at 24.7%, imported rather significantly decreased to reach 19.6%.
Local inflation in June marginally increased to 25%. However, imported inflation rather declined sharply to 17.5%.
The latest to conform to the trend is July. While both categories see a decline, local inflation dropped to 23.3% to still be ahead of imported inflation which further declined to 15.6%.
This trend analysis flips the narrative that imported items are the drivers of inflationary threats. This trend corroborates the challenges associated with the local production systems which are bedeviled by the high cost of inputs among others.
Senior Economist at the Policy Initiative for Economic Development (PIED), Dr. Daniel Amateye Anim commenting on the trend confirmed that this is an indication of the high cost of production in the local economy.
He tells The High Street Journal that, “the implication is that the cost of producing the local item in recent times have increased. Once the cost of production has increased, the prices of those products will eventually increase and that will actually drive the inflationary pressures.”
With this development, it is therefore imperative for the government and policymakers to respond with initiatives that will ensure that the cost of production for producers and manufacturers is reduced. This can possibly bring down prices and then translate into reduced local inflation.
