Inflation remains a pressing challenge for Ghana’s economy, with the Ghana Statistical Service (GSS) advocating for a shift in strategy to address it effectively.
According to the GSS, inflation management should not rest solely on the Bank of Ghana (BoG). Instead, a collaborative approach involving all government ministries is essential to tackle this economic issue comprehensively.
Historically, the BoG has been at the forefront of controlling inflation, relying heavily on monetary policy tools such as adjusting interest rates. In 2022, the BoG implemented record-high interest rates in an attempt to rein in inflation. In more recent developments, the Bank reduced its monetary policy rate to 27% in September 2024, marking its second rate cut since 2021. This decision followed a nine-month period during which the policy rate was held at 29% after being reduced from 30% in January 2024.
The September rate cut aimed to ease inflationary pressures and provide relief to borrowers. While these measures signaled cautious optimism, they have not entirely curtailed inflationary trends. Recent data from the GSS shows that Ghana missed its end-of-year inflation target of 15%.
In December 2024, inflation climbed for the fourth consecutive month, reaching 23.8%, up from 23.0% in November. This rise was largely attributed to surging food prices, highlighting the complexity of inflationary pressures and the limitations of relying solely on monetary interventions.
Beyond Monetary Policy
Professor Samuel Kobina Annim, the Government Statistician, has emphasized the importance of involving all relevant sectors in combating inflation.
“We definitely need to move the conversation away from a Central Bank’s responsibility alone. We need to tackle inflation at least from two perspectives. Every sector ministry we talk about in our release should be responsible.”
Professor Samuel Kobina Annim
He explained that while the Ministry of Food and Agriculture plays a significant role in addressing inflation linked to food prices, other sectors also contribute to the overall inflation rate.
“Our conversation focuses on the Ministry of Food and Agriculture. But if you look at the items – transport, housing, water, electricity, and gas are dominant divisions. These ministries should be part of the conversation in driving down the rate of inflation.”
Professor Samuel Kobina Annim
Leveraging Granular Data for Effective Policy
To address inflation comprehensively, the GSS is advocating for the use of granular data to understand the specific factors driving inflation. Professor Annim highlighted the importance of going beyond headline figures to develop targeted interventions.
“It will be a challenge speaking directly to what different state institutions should be doing differently, especially when you don’t know the details of what they are doing, apart from what you are told or you read.”
Professor Samuel Kobina Annim
This emphasis on detailed data underscores the need for evidence-based policy decisions. For example, rising food prices could prompt targeted actions by the Ministry of Food and Agriculture, while increasing costs in transportation and housing would require interventions from the Ministries of Transport and Works and Housing, respectively.
“On the back of this, it will be important we step back and look at how Ghana Statistical Service is promoting the granular data from the headline figure. So we are calling for an inter-ministerial engagement if we want to bring down the rate of inflation.”
Professor Samuel Kobina Annim
Inflation is a multifaceted issue influenced by diverse factors such as global market trends, supply chain disruptions, and domestic production inefficiencies. Addressing these complexities requires a coordinated effort across various government ministries. By including ministries such as Food and Agriculture, Transport, Energy, and Housing in discussions on inflation control, Ghana can adopt a holistic approach to stabilizing prices and promoting economic growth.
This inter-ministerial approach would allow Ghana to address both the immediate and structural causes of inflation. It aligns with the GSS’s vision of leveraging data-driven insights to inform policy and foster sustainable economic stability.
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