Seth Terkper explains the causes and how April inflation shot up to 23.6%

Former Finance Minister Seth Terkper, has stated that the average inflation rate for April, which hit 23.6%, was mainly as a result of some critical personal and business expenses that went above even the current April average.

April’s food inflation recorded 26.6%, higher than both last month food inflation, 22.4%, and the average of the previous 12 months (13.5%), the Ghana Statistical Service (GSS) announced on Wednesday May 11.

Food inflation’s contribution to total inflation, however, decreased from 51.4% in March 2022 to 50% in April 2022.

Overall month-on-month food inflation was 5.8%, which is higher than both the twelve-month national month-on-month rolling average of food inflation, 2% and the rate recorded for April 2021, 2.3%.

All the 15 food subclasses recorded positive month-on-month inflation with Fruit and Vegetable Juices recording the highest, 15.3%. Non-food year-on-year inflation on average went up again in April 2022 compared to March 2022 (from 17.0% to 21.3%).

Only one out of the 12 Non-food Divisions had the 12 months rolling average to be higher than the year-on-year inflation for April 2022 for the divisions. Transport is the Division that recorded the highest inflation in April 2022, 33.5%.

The national year-on-year inflation rate was 23.6% in April 2022, which is 4.2 percentage points higher than the 19.4% recorded in March 2022, the Ghana Statistical Service (GSS) also noted on Wednesday May 11.

The month-on-month inflation between March 2022 and April 2022 was 5.1% .

In a Twitter post made by Mr Terkper, he stated that the bases for calculating inflation changed in 2018, where some categories gained more weight over the years BUT the prices FOR goods, compared to services, still shot up on the commodities market.

He further stated that the Bank of Ghana started to react earlier with the rise in monetary policy rate (MPR) after months of decreases and stability.

Mr Terkper noted that, Some more negative, mainly fiscal or budget, were the reasons why Bank of Ghana started to react with corrective monetary policies in the release of the last MPR figures.

He expects the central bank to continue with the rate increases and other monetary measures, on account of both domestic and external factors. These include the Russia-Ukraine war and post-covid corrections in the advanced countries

Source: Ekow Coffie