The national year-on-year inflation rate was 7.5 percent in May 2021, reflecting a 1 percentage point decline from what was recorded in April 2021. This also contrasted with a peak in inflation in May 2020 last year at 11.5 percent.
Unsurprisingly, this means that on the average, prices of goods and services are increasing but at a slower rate. Usually, the Ghana Statistical Service (GSS) uses a selected basket of goods which reflects the spending pattern of consumers for a given period to determine the rate of inflation. It is worthy to note that, this does not necessarily mean prices of goods and services are declining.
Per the inflation figures since the COVID-19 pandemic last year, this indicates the lowest ever recorded. This also means that inflation is nearing the lower bound of the medium-term inflation target band of 8+/-2.
From the Ghana Statistical Service (GSS) newsletter released on Wednesday, 9th June, 2021, month-on-month inflation between April and May 2021 was 0.8 percent. This represents a 0.7 percentage point lower than in April 2021.
Likewise, food inflation remained high throughout last year, but has for the second consecutive time in the year, declined. Food inflation inched downwards to 5.4 percent below that of April 2021, which recorded 6.5 percent.
As such, the food inflation rate is lower than the average of 11.3 percent over the last 12 months. That said, food contributed 32.3 percent to overall inflation compared to 33.8% in April 2021. This is the lowest contribution observed since the last rebasing of the economy in 2018.
The overall month-on-month food inflation was 13 percent, which is above the average month-on-month inflation. Accordingly, the low inflation is driven by negative inflation for vegetables (-3.5%), the GSS indicated.
More so, at the regional level, Northern region recorded the highest food inflation at 11.8 percent in May 2021. Also, the Western Region recorded the lowest within the period at 0.4 percent.
Conversely, non-food year-on-year inflation on average declined to 8.0 percent from 10.0 percent in April 2021. Out of the 13 divisions, ten had lower or equal year-on-year inflation in May 2021 compared to the average over the last 12 months. Housing, Water, Electricity, Gas inched down from 25.0 percent in April 2021 to 19.0 percent in May 2021.
Aside this, Transport is the non-food division that recorded the biggest decline of 7.6 percent compared to the 12 month average of 11.7 percent. According to the GSS, this is driven by the inflation of diesel (37.7% year-on-year and 10.0% month-on-month) and Petrol (34.0% year-on-year and 8.0% month-on-month).
Regionally, the Greater Accra region recorded the highest non-food inflation with a rate of 17.9 percent in the month while the Eastern region recorded the lowest at 1.1 percent.
Imported and Local Inflation
Furthermore, the data shows that inflation for imported goods was 7.3 percent, 0.1 percentage point lower than in April 2021. Also, the inflation for locally produced items was 7.3 percent on average down from 8.7 percent in April 2021.
On a month-on-month basis, inflation for imported goods reached 0.8 percent whereas that for locally produced goods reached 0.6 percent.
Additionally, on a year-on-year basis, regional inflation ranged from 2.6 percent in Western Region to 12.3 percent in Greater Accra Region. On a month-on-month basis, Upper West Region recorded the highest inflation.
Meanwhile, three regions saw a sharp decline in Food inflation as compared to last month. Western Region (from 6.5% to 0.4%), Eastern Region (from 8.2% to 4.3%), Ashanti Region (from 9.8% to 5.9%).