PPI inches down to 7.0% in December 2020

The Producer Price Inflation (PPI) which measures the ex-factory prices of goods and services in the country declines to 7.0 percent in December 2020.

This is according to the recent PPI Newsletter released by the Ghana Statistical Service on Wednesday, January 20, 2021.

This rate represents a 1.1 percentage point decrease in producer inflation relative to the 8.1 percentage points recorded in November 2020.

 The month-on-month change in the producer price index between November 2020 and December 2020 was 0.6 percent.

As indicated earlier, whilst the 1.1 percentage point represents the percentage decline on the yearly PPI, the 0.6% means that between November and December last year, producer inflation was 0.6 percentage, the actual price increment for December alone from the producer’s perspective.

The three major sub-sectors of industry; Mining and Quarrying, Manufacturing, and Utilities all experienced a decline in producer prices between November 2020 and December 2020.

The producer price inflation in the Mining and Quarrying sub-sector decreased by 2.5 percentage points over the November 2020 rate of 34.0 percent to record 31.5 percent in December 2020.

The producer inflation for Manufacturing, which constitutes more than two-thirds of the total industry, decreased by 1.0 percentage points to record 3.8 percent.

Nine out of the sixteen major groups in the manufacturing sub-sector recorded inflation rates higher than the sector average of 3.8 percent.

Manufacture of motor vehicles, trailers, and semi-trailers recorded the highest inflation rate of 34.5 percent, while the Manufacture of coke, refined petroleum products, and nuclear fuel recorded the least inflation rate of -4.0 percent.

The utility sub-sector decreased marginally by 0.1 percentage points over the November 2020 rate of 0.3 percent to record 0.2 percent.

 The annual rate of Manufacture of other non-metallic mineral products declined to10.9 percent in December 2020, as compared to 11.1 percent in November 2020.

Also, for the manufacture of food products and beverages, the annual rate was 4.8 percent in December 2020, as compared to 9.2 percent in November 2020.

 Electricity and Water Supply recorded an inflation rate of 0.2 percent in December 2020, as compared to 0.3 percent in November 2020.

Petroleum Price Index

 The producer inflation rate in the petroleum sub-sector was 8.2 percent in December 2019. The rate increased to a record 20.6 percent in January 2020 but declined consistently to record -15.4 percent in May 2020.

 However, the rate increased continuously to record -0.3 percent in September 2020 and declined to record -5.0 percent in November 2020. The rate increased to record -4.0 percent in December 2020.

The Producer Price Index (PPI) measures the average change over time in the prices received by domestic producers for the production of their goods and services.

This means that the PPI measures price movements from the viewpoint of the seller or industries that make the products contrary to the Consumer Price Index (CPI) which measures price movements from the buyers’ or consumers’ point of view.

Because the Producer Price Index measures price changes before they reach consumers, some people see it as an earlier predictor of inflation than the CPI.

The PPI for Ghana reports the producer price indices with reference to September 2006, the base period.

This release shows the annual and monthly producer inflation rates for all industries and three major sub-sectors of industry (Mining and Quarrying, Manufacturing and Utilities) for the last twelve months.

The Ghana Statistical Service however cautioned that the figures for December 2020 are provisional, and are subject to revision when additional data become available. All other indicators are final.