According to Dr. John Kwakye, director of research at the Institute of Economic Affairs (IEA), a high inflation rate cannot be effectively combated with a single demand management strategy.
He said that the administrators of the economy should also focus on the supply side of the factors that cause inflation, including food, gasoline, and exchange rates.
On Wednesday, July 6, Dr. Kwakye stated that “Inflation is coming predominantly from food, fuel, and the exchange rate; therefore they are mainly supply-side variables” at the 3businesscolloquium hosted by Media General in Accra. With a demand control tool, you can’t successfully combat that kind of inflation.
“So we have said that the central bank and government should to work together to address to target the very source of of the inflation. We are not saying do away with the inflation targeting framework.
“It should still be there but you should also look at the supply side, the cost side that are driving your inflation.”
“In fact, even in the US, UK, they are struggling to keep inflation and this is exactly because we are all facing a different type of inflation now all over the world. So we are saying that here, the central bank and government should work more closely together in fighting inflation.”
Inflation rate in May 2022 recorded 27.6% from the 23.6% recorded in April 2022, the Ghana Statistical Service (GS) announced.
The Government Statistician, Professor Kobina Annim, explained at a press conference in Accra on Wednesday June 8 that the rate of inflations for Transport (39.0%), Household Equipment and Maintenance (33.8%), Housing, Water, Gas and Electricity(32.3%) and Food and Non-Alcoholic Beverages (30.1.6%) were higher than the national average (27.6%).
Regarding food inflation five sub-classes record inflation rates higher than the overall food inflation (30.1%) in May.
The inflation for imported goods was 28.2%, which is higher than the 24.7% recorded for April 2022, while the inflation for locally produced items was 27.3%, up from the 23.0% recorded in April 2022.
