Ghana’s inflationary pressures continued their upward trajectory in December 2024, reaching a concerning 23.8 percent, as reported by the Ghana Statistical Service (GSS). This marks the fourth consecutive month of rising inflation, deepening the economic challenges faced by the nation. The Consumer Price Index (CPI), a key indicator of the average price of goods and services, reached 248.3 in December, signifying a substantial 23 percent surge compared to the same period in 2023. This persistent rise in inflation erodes purchasing power, impacting household budgets and potentially hindering economic growth.
The month-on-month inflation rate, comparing November and December 2024, registered at 1.8 percent, indicating a sustained upward momentum in price increases. Food prices remained a significant contributor to the overall inflationary pressure, with food inflation reaching 27.8 percent in December. This represents a 2.8 percent month-on-month increase, suggesting that the cost of essential food items continues to escalate, placing a strain on household finances, particularly for lower-income families. The persistent rise in food inflation raises concerns about food security and affordability, potentially impacting nutritional intake and overall well-being.
Non-food inflation, while lower than food inflation, also exhibited an upward trend, reaching 20.3 percent in December. This represents a 0.9 percent increase compared to the previous month, indicating that price pressures are broadening across the economy, impacting a wider range of goods and services beyond just food. The rising cost of non-food items, including transportation, housing, and healthcare, further complicates household budgeting and contributes to the overall economic strain.
The GSS data also revealed a significant divergence in inflation rates between locally produced and imported items. Inflation for locally produced items surged to 26.4 percent in December, exceeding the overall inflation rate and highlighting the challenges faced by domestic producers. Factors such as rising input costs, supply chain disruptions, and exchange rate fluctuations could be contributing to the higher inflation for locally produced goods. This disparity raises concerns about the competitiveness of domestic industries and the potential impact on economic growth.
In contrast, inflation for imported items stood at a relatively lower 17.9 percent in December, although still significantly high. This difference suggests that while global inflationary pressures are impacting Ghana, the more pronounced price increases for locally produced goods point to domestic factors playing a dominant role in the overall inflationary trend. The lower inflation for imported items could be attributed to factors such as stabilizing global commodity prices or a strengthening of the local currency.
The persistent rise in inflation presents a significant challenge for Ghana’s economic policymakers. Addressing this issue requires a comprehensive approach that considers both demand-side and supply-side factors. Demand-side measures, such as tightening monetary policy through interest rate hikes, can help curb consumer spending and reduce inflationary pressures. However, these measures also carry the risk of slowing economic growth. Supply-side interventions, such as addressing bottlenecks in the supply chain, promoting domestic production, and stabilizing the exchange rate, can help alleviate inflationary pressures by increasing the availability of goods and services. A balanced approach that combines both demand-side and supply-side measures is crucial to effectively address the complex challenge of rising inflation while supporting sustainable economic growth. The ongoing inflationary pressures underscore the need for proactive policy interventions to stabilize prices, protect household purchasing power, and ensure long-term economic stability.
