The Central Bank of Ghana has once again been put in a tight corner as Ghana’s year-on-year inflation rose by 4 percentage points in May 2022, driven mainly by rising transport inflation which was 11.4 percentage points higher than the national average inflation.

According to the latest Consumer Price Index (CPI) data released by the Ghana Statistical Service (GSS), the nominal CPI for May 2022 was 162.8 relative to 127.6 in May 2021. This resulted in a year-on-year inflation rate of 27.6% in May 2022, higher than the 23.6% reported in April 2022.

On a monthly basis, inflation reduced by 1.0 percentage points in the fifth month of the year. Data from the GSS showed that month-on-month inflation between April 2022 and May 2022 was 4.1%. This is lower than the month-on-month inflation of 5.1% recorded between March and April 2022 but higher than 4.0% recorded between February and March 2022.

Among the top 10 items with the highest weight, Bread recorded the highest inflation of 41.3%, followed by Bus and Trotro Fares (39.9%) while cooked rice recorded inflation rate of 32% in May 2022.

In the first quarter of 2022, the average inflation was 16.3%, relative to 10.2% recorded for the same period in 2021. Average inflation in the second quarter of 2021 was 7.9% but rose to 9.8% in Q3 2021. In the last quarter of 2021, thus Q4 2021, inflation rose to 11.9%.

The national year-on-year inflation as of December 2021 was 12.6%, 15 percentage points lower than the current rate in May 2022. This also means that the current inflation rate is 2.2 times higher than what was recorded in December last year.

Food Inflation

The Government Statistician, Prof. Samuel Annim Kobina, said at the press briefing to announce the current inflation that food inflation for May 2022, relative to the rolling average for the period between June 2021 to May 2022, has more than doubled.

The margins between food and non-food inflation was 4.4 percentage points relative to 5.4 percentage points for March 2022 and 5.3 percentage points for April 2022. Between April and May 2022, Food Inflation went up by 3.5 percentage points, up from 26.6% to 30.1%.

Food inflation rate recorded in May this year was higher than the average over the last 12 months of 13.5%. The Month-on-month Food inflation was 4.0% in May 2022, lower than the 5.8% recorded in April.

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Focusing on year-on-year food inflation for May 2022, five sub-classes recorded inflation rates higher than the overall food inflation (30.1%). This was distantly led by Oils and Fats (52.0%) followed by Water (42.4%).

On a month-on-month basis, three sub-classes recorded inflation rates higher than the overall inflation (4.0%). This was led by Oil and Fats (6.5%) followed by Vegetables (5.4%) and Cereal Products (5.3%).

Non-food Inflation

Likewise, Non-food Inflation rose by 4.4 percentage points from 21.3% in April 2022 to 25.7% in May 2022. Within the Non-food category, Transport (39.0%), Household Equipment and Maintenance (33.8%), Housing, Water, Gas and Electricity (32.3%) and Food and Non-Alcoholic Beverages (30.1.6%) recorded rates higher than the national average (27.6%).

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In May 2022, twelve of the thirteen divisions record inflation rates higher than the rolling average from June 2021 to May 2022. Insurance and Financial Services is the only division that recorded an inflation rate for May 2022 that is lower that the rolling average for the period between June 2021 to May 2022.

Notably, imported inflation (28.2%) sustained its dominance over domestic inflation (27.3%) with a margin of 0.9 percentage points in May 2022. Meanwhile, inflation for imported goods was 24.7% in April 2022 while inflation for locally produced items was 23.0%. Even though both imported and domestic inflation went up in May 2022, the rise in domestic inflation was relatively higher.

It must however be noted that the inflation rates recorded each month have differential impacts on households depending on the basket of items purchased by each household.

Given households’ taste, disposal income and availability of alternatives, the basket of items purchased can be varied in response to the soaring prices.