Produce price inflation drops

Dr. Grace Bediako

Drop in prices of manufacturing products culminated in a dip in inflation at the producer perspective, from 12.56 percent recorded in April to 11.28 percent.

The Producer Price Inflation (PPI) which measures the average change over time in the prices received by domestic producers for their production of goods and services had been rising since February 2007 but the drop in last month's rate means the first since its institution.

This implies that ex-factory prices for all industry which includes manufacturing, mining and quarrying as well as utilities sub sectors on the average dropped in April 2008 by 1.24 percentage points relative to April 2009.

Dr. Grace Bediako, Government Statistician said the drop in the PPI did not directly mean a correlation to that of the Consumer Price Index (CPI).  

For the sectors, May 2009 was lower (6.15 percent) for manufacturing, the most important industrial sub-sector, with 69.75 percent share of all industry than for April 2009 (10.78 percent) though it contributed immensely in the downward change.

In the sector, there were appreciable rates of at least 50 percent in the manufacture of wood and publishing, printing and reproduction of recorded media sub-groups. Inflation for manufacture of coke, refined petroleum products and nuclear fuel, however dropped.

In contrast, the mining and quarrying sector inched up, from 33.61 percent recorded in April to 48.88 percent recorded in May. It actually recorded the highest inflation. 

Mining of metal ores recorded the highest and has contributed largely to the direction of inflation in this sector.

Quarrying of sand, stone and clay however remained stable.

At the same time, utilities which include production, transmission and distribution of electricity, and collection, purification and distribution of water, remained virtually unchanged.

The year-on-year inflation from the producer's perspective fluctuated throughout the period. The rates between March 2008 and October 2008 were higher than that of the months afterwards for all the sub sectors. Mining and quarrying recorded the highest rates for most of the period, while utility has recorded the lowest rates since November 2008.

By Charles Nixon Yeboah