Ghana's inflation rises as BoG governor promises to curb excessive volatility in 2016

Ghana's annual inflation climbed to 17.6 per cent in November up by 0.2 percentage points from 17.4 per cent recorded in the previous month, the statistical service announced on Wednesday.



The Bank of Ghana will continue to maintain a tight monetary policy stance until such a time inflation expectations are well-anchored


The price drivers for food inflation rate were vegetables (13.4 per cent), and mineral water, soft drinks, fruits and vegetable juices (8.4 per cent). The main price drivers for the non-food inflation included education (29.6 per cent), recreation and culture (26.5 per cent), transport (26.2 per cent).


The rest were clothing and footwear (25.6 per cent) as well as furnishings, housing, water, electricity, gas and other fuels (24.1 per cent).


The inflation rate for imported items of 18.6 per cent for November 2015 was 1.4 per cent higher than that of locally produced items of 17.2 per cent 2015, deputy government statistician, BaahWadieh said.


Lower commodity prices and a fiscal crisis led to a sharp drop in the country's local currency – the cedi against the greenback, raising import prices and the pushing the inflation up in the last two years.


In a move to tame inflation, Ghana's central bank increased its benchmark monetary policy rate by 100bps to 26 per cent on November 16, 2015, but policymakers said additional tightening was required to re-anchor the displaced expectations.


It is the fourth rate hike since the year started, aiming to fight stubbornly high inflation.


"In the coming year, the Bank of Ghana (BoG) will continue to monitor developments in the market and take appropriate measures, where necessary, to prevent excessive volatility of the currency and gradually bring down inflation and its expectations," the central bank governor, Kofi Wampah said.


"In particular, the Bank of Ghana will continue to maintain a tight monetary policy stance until such a time inflation expectations are well-anchored.


"This, together with continued physical consolidation as announced in the 2016 budget and structural reforms in the money making markets, will help improve stability in those markets.


"The BoG will be driven to act like it always has to manage the money supply [inflation] by raising the prime rate in order to mop up the excess liquidity."


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