Business News of Monday, 4 February 2013

Source: B&FT

Telecoms inflation increases marginally

Year-to-year inflation in the communication services sector of the economy inched up marginally for the first time in 12-months during December last year, B&FT analysis has shown.

The latest Consumer Price Index (CPI) figures of the Ghana Statistical Service, which measures changes over time in the general price level of goods and services, indicate that the communication sub-sector of the economy recorded an increase in its year-to-year inflation from 0.2 percent in November last year to close the year at 0.4 percent.

Since January last year, price changes in the communications sector have remained stable at a time the declining value of the cedi had impacted negatively on the general prices of goods and services in the country.

According to the Ghana Statistical Service (GSS), the communications sector consistently recorded an inflationary figure of 0.7 percent for the first seven months of 2012, which further declined to 0.2 percent between August and November that year.

However, inflationary pressures in the communication sub-sector increased to 0.4 in December, at the time the local currency had begun to make made some gains against the major trading currencies -- especially the US dollar.

Nonetheless, the recorded 0.4 percent inflation in the communications sector is far below the economy average of 8.8 percent for December.

Analysts have attributed the minimal price changes in the communications sector to the competition in the telecom industry, which has forced operators to engage in price-wars in an effort to attract more customers to their networks.

As per the Consumer Price Index figures released by the GSS, the contribution of the communication sector to general inflation for December was zero percent.

However, other analysts -- while recognising the contribution of the communication sector to the economy -- have played down attempts to project the sector as the determinant of the country’s inflationary performance, since its contribution to the consumption basket used in calculating inflation is almost negligible.

This, they explained, stems from the fact that the weight of the communications sector in the consumption basket is just 0.3 percent.

Inflation in the country declined for the month of December after going up marginally to 9.3 percent in November from October’s figure of 9.2 percent.

The GSS has attributed the December inflation performance to the relative stability of the local currency as well as the low food rate, which limited the overall rate of consumer price increases.

The inflation figures for December fell within the targetted band of single-digit inflation.