Ghana’s 7.9% inflation lowest since 1992 – Dr. Bawumia

Ghana’s December 2019 inflation rate of 7.9% is the lowest since 1992, Vice-President Dr Mahumudu Bawumia has said.

The current year-on-year inflation is based on the amendment in the reference period for calculating the inflation rate to 2018 from the previous 2012.

Inflation is a key determinant of interest rate, both fixed income and lending rates.

Speaking at the Government’s Town Hall Meeting in Kumasi, Dr Bawumia said: “Inflation has dropped steadily from a high of 15.4% at the end of 2016 to 7.9% at the end of December 2019, which is about the lowest since 1992.”

Using graphic data to buttress his case, Dr Bawumia said inflation expectations in the past were not properly anchored.

“Before the NPP government came into office, there was a wide divergence between the different inflation rates – headline, food inflation and non-food inflation; there was a wide divergent. It means inflationary expectations were not quite well anchored. What we are seeing since we came to office with the good work and management that we are doing, you are seeing a convergence of food inflation, non-food inflation and headline inflation… which means we are managing the inflation much better”, said Dr Bawumia.

He noted that the low inflation is a reflection of the reduction in the rate of increase in petroleum prices, saying: “Under the NDC, between 2009 and 2012, the average annual increase in petrol prices was 25.9% every year; between 2013 and 2016. Every year, the average increase was 24% but because we’ve been able to bring inflation down and manage the economy better under Nana Akufo-Addo, between 2017 and 2019, it has been 13.5%. So, this is a reflection of good economic management.

He added that the low inflation has also contributed to a reduction in electricity prices.

The country’s inflation, which measures the rate at which prices of goods and services are rising, dropped to 7.9% in December 2019 from 9.4% recorded in December 2018.