Monday, May 20, 2024

Inflation hits 12-year high as food prices surge

Prices that consumers pay for everyday items climbed in March to their highest levels in more than 12 years as supply chain disruptions induced by the war in Ukraine sent food, fuel and fertilizer prices soaring.

The Consumer Price Index surged 19.4% from a year earlier, outstripping the expectations of many economists.

The latest price rise is the highest since August 2009, exceeding the 15.7% increase recorded in February 2022.

Food inflation rose to 22.4% from 17.4% in February, while non-food price growth jumped to 17% from 14.5% within the same period.

“We are not surprised with the rate of increase as the war in Ukraine is beginning to impact economies worldwide, especially those in direct trade relations like Ghana” Dr Kojo Poku, Researcher at the Centre for Social Policy Studies, University of Ghana said.

Last month, the Bank of Ghana’s monetary policy committee hiked its benchmark interest rates by 2.5% to 17%, raising the cost of borrowing as part of measures to tame inflation without stifling growth.

This was followed by a raft of austerity measures including spending cuts and further tax policies by the government to improve fiscal performance and engender investor confidence.

“Based on the drivers of inflation for March, we do not expect the central bank to raise its policy rate further, Dr Poku said. “We forecast price pressures to ease by mid-May when the monetary policy committee convenes,” he added.

By Sani Abdul-Rahman, Financial journalist.

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