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17.11.2008 Business & Finance

Inflation Falls

By Daily Guide

Inflation, which is the average change in general price levels, continued its decline, dropping (by 0.59 percent) to 17.30 percent for October.

The decline, which began in July, could continue and this would be good for the country irrespective of the elections, where spending was expected to be high.  

Dr. Grace Bediako, Government Statistician, who released the result last Friday, said the country was on track to meeting the 17 percentage points target set by the Bank of Ghana.

The Central Bank last month kept the prime rate- the rate at which it does its lending to commercial banks- at 17 percent, a strategy to mop up excess liquidity from the financial system to reduce spending.

According to the figures released by the Ghana Statistical Service, the drop was triggered mainly by the food inflation, which constitutes more than half the weight used to compute the Consumer Price Index (CPI). It eased by 0.20 percentage points.

However, the non food inflation shot up marginally by 0.40 percentage points.

Eight sub-groups, especially the non-food component contributed more than one percentage point to the annual rate of inflation for October 2008.

Hotels, cafes and restaurants as well as housing, water, electricity, gas and other utilities were the highest contributors, adding 2.06 and 1.61 percent respectively.

On the other hand, clothing and footwear, transport and furnishings, household equipment and routine maintenance added 1.56, 1.54 and 1.46 percent respectively.

While education saw an insignificant change of 0.14 percent, communications once again remained the same for 13 months running.

With regard to food inflation, bread and cereals, fish and vegetables including potatoes added 1.68, 1.45 and 1.31 percent respectively to the change.

Inflation in the rural areas continued to remain high despite falling to 18.78 percent, from the previous 21.18 percent recorded in September while urban inflation inched up slightly to 15.52 percent, from the previous 14.49 percent.

Dr. Grace Bediako, commenting on a question posed by CITY & BUSINESS GUIDE on why non-food inflation went up, emphasized that some pressures on the non- food services might have been the contributing factor.

For the regions, Ashanti region continued to record the least inflation of 13.22 percent, from the previous 14.03 percent, followed by the Volta region which saw a sharp drop in inflation to record 15.96 percent.

On the other hand, the Greater Accra region which some two months used to be the region with the least inflation recorded 16.96 percent.

Brong Ahafo, Upper East, Eastern and Central regions recorded inflations of 17.51, 18.96, 19.81 and 20.13 percent respectively.

Western and Northern regions were the regions that recorded the highest inflation rates of 20.15 and 24.18 percent respectively. By Charles Nixon Yeboah