Author: Dr. John Osae-Kwapong, Democracy and Development Fellow, CDD-Ghana, and Project Director, the Democracy Project

Ghana’s inflation has dropped to 3.8% as per the Ghana Statistical Service’s release last Wednesday. In a conversation with a good friend, I was asked why prices of goods and services on the market are not declining if indeed inflation is declining.

I am not an economist and therefore cannot explain all the intricacies of inflation and how it corresponds or does not to other economic measures as well as the everyday market experiences of the ordinary Ghanaian.

However, I know that globally, there are certain acceptable indicators for measuring the health of a country’s economy, and inflation is one of them. I won’t be wrong to say an inflation rate of 3.8% is a positive indication of the health of a country’s economy compared to a higher number. So why do such positive indications of the health of a country’s economy become the subject of partisan discourse?

Measuring Inflation

As previously mentioned, there are ways of measuring the health of a country’s economy. These ways are not unique to Ghana, and neither are the methods. In addition, there are globally accepted practices associated with generating these measures.

Granted, countries may occasionally revisit their methodological approach but must still be in conformity with these standards. For example, calculating inflationary rates requires generating what economists call a basket of goods and services and collecting price data over several markets in each country.

Over the years, Ghana has expanded this “basket” to include more items, but note that the items in a “basket” are designed to capture as many as possible commonly consumed items across a given population. Also, not everyone consumes all items in the “basket.”

A public figure once challenged the inflation number by picking out an item such as grapes and asked, “how many people eat grapes in Ghana?” Their contention was that the inclusion of items not commonly consumed by the majority of the population misrepresents the inflation rate.

If I were to create my “individual basket,” it will be different from my neighbor’s even though we may share some similarities. The national picture is simply an aggregation of what occurs at the individual level – be it the items or the markets from where the price data is generated.

The Political Meaning of Inflation

Numbers are designed to be a more “objective” way of capturing reality. I often argue that in a politically competitive system of government, inflation or other objective measures of the health of an economy have political meaning. What do I mean by that?

When economic indicators go south, an incumbent government takes the heat for it, mainly driven by the main opposition. If you recall, when inflation was 54%, the narrative about the past government was not very positive.

But prior to the runaway phenomenon, between 2018 and 2021, inflation remained low, never rising beyond 10%. When reference is made to past inflation, there are two responses from those on the NPP side of the political aisle: a) the pre-COVID period; and b) the steady decline from 54% to 22%.

When economic indicators are very positive, an incumbent takes credit, and rightly so, for it. After all, if at a 54% inflation rate, the government gets blamed for its actions or inactions then at 3.8% it would seem logical to me to credit it to the actions or inactions of the government.

But partisan politics sometimes does not flow in neat sequences. This means while an incumbent touts positive economic indicators like a 3.8% inflation rate, an opposition party strives to create an alternative narrative that tries to take credit away from the government.

In all of this is the ordinary Ghanaian who, in the middle of the partisan fight over who gets credit or not for a 3.8% inflation rate, has only one concern – how does it translate into their everyday economic reality.

If the ordinary Ghanaian, who is a voter, feels a change in their economic reality, their natural disposition will be to politically reward those in power who are managing their economy.

Between an incumbent government, a main opposition political party, and the ordinary Ghanaian who votes, the political dynamics of numbers such as the current rate of inflation is interesting to observe.

Beyond Politics

In the political conversations and debates though, it must not be lost on us that there is something bigger than our political interests. First, the benefits of a healthy economy do not discriminate by party colors.

Second, and most importantly, we must endeavor not to let our rhetoric appear to be calling the integrity of institutions like the Ghana Statistical Service (GSS) into question. Imperfect as they may be, anyone who has closely followed them will agree with me that over the last ten years, their work deserves our utmost commendation.