High Inflation Rate Tends To Build Up A High-Interest Rate – Economist

An Associate Professor and a finance lecturer at the University of Ghana Business School (UGBS), Lord Mensah has said that the high inflation rate in the country tends to build up high-interest rates if proper measures are not put in place, he made this known Plan B Fm’s morning Nkosuo Nsem when speaking with host Ohene Addo.

Prof. Stressed that the rapid increase in inflation is a result of frequent importation of food products that can be produced locally into the country and it is having a bad impact on the economy.

He noted that government can do something about food inflation which is currently at 17.4 per cent by prioritising the agricultural sector to produce more food to feed the nation rather than importation.

Ghana Statistical Service early last month revealed that the year-on-year inflation rate rose to a near six-year high in February at 15.7 per cent.

The rate was 1.8 percentage points higher than the 13.9 per cent recorded in January 2022.

The month-on-month inflation between January 2022 and February 2022 was 2.4 per cent.

Professor Samuel Kobina Annim, the Government Statistician, at a press conference in Accra, said food inflation regained its dominance at 17.4 per cent while non-food inflation rate stood at 14.5 per cent.

On month-on-month basis, food inflation exceeded non-food inflation in February by 1.5 percentage points.

Housing (25.4 per cent), transport (18.3 per cent which includes fuel) and food (17.4 per cent) were the divisions that recorded the highest inflation.

He said the contribution of food and non-Alcoholic beverages to overall inflation increased by 5.2 percentage points from 17.5 per cent in December 2021 to 22.1 per cent in January 2022.

Food inflation’s contribution to total inflation increased from 44.2 per cent in January 2022 to 49.4 per cent in February 2022.

Inflation for locally produced items was 16.7 per cent, up from the 15.0 per cent recorded inJanuary 2022 while imported goods were 12.9 per cent, higher than the 11.0 per cent for January2022.

At the Regional level, Greater Accra recorded the highest inflation of 19.5 per cent and theWestern Region recorded the lowest of 11.6 per cent.