The latest data released by the Ghana Statistical Service has revealed that Ghana’s inflation for the month of July 2024 was mainly driven by locally produced food items.
Ghana’s headline inflation for July 2024 recorded a marginal reduction to 20.9% from 22.8% in June 2023. This means that between July 2023 and July 2024, the general average price levels of goods and services increased by 20.9. This indicates that residents in Ghana experienced an increase in prices of goods and services to the tune of 20.9% on a year-on-year basis.
Moreover, inflation for locally made goods for the month of July stood at 23.3% while that of imported goods stood at only 5.6%. A careful analysis of the GSS data reveals that 41.1% of the items that recorded a year-on-year inflation above the national inflation were locally produced food products outpacing all other categories.
About 27.6% of imported non-food items also recorded an inflation rate above the overall inflation. Next is locally produced non-food items of which 23.1% of the items measured went above the overall inflation followed by imported food items with only 8% going above 20.9%.
It is worthy of note that despite the depreciation of the cedi which should have driven inflation through imported food and non-food items, locally-made foods and non-food inflation interestingly were the main drivers of the overall inflation with locally-produced food taking center stage. Even more pronounced is the fact that of the top twenty items with the highest inflation, only two were imported, with 18 of them being locally produced.
Commenting on this dynamics, Senior Economist at the Policy Initiative for Economic Development (PIED), Dr. Daniel Amateye Anim noted that this might be an indication of a 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.”
He further indicated some foods that are not yet in season might have played a role in this drive citing yam among others as a reference.
He added that transportation is also a key factor considering the significant role transportation cost plays in the price build-up of food.
“If you look at the dynamics, as it stands now, foodstuffs like yam are very expensive because we are not yet in the season. Even though as much as we have not seen increases in recent times in terms of transportation costs across the board. But we all understand that most of these foods are transported from the production centers to the market centers. So the cost of transportation is a key driver within the domestic space,” he noted.
With these reasons, he concluded that despite the depreciation of the cedi, the dynamics show that it could not offset the domestic factors driving prices of food and non-food items. This increasing food inflation implies that households are forced to allocate substantial portions of their incomes for food stifling savings while the living conditions of those with low income deteriorate.
