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25.10.2004 Business & Finance

Single Digit Doubtful Even As Inflation Drops To 12.6%

By BUSINESS & FINANCIAL TIMES

The annual inflation price changes as computed in the Consumer Price Index (CPI) released by the Ghana Statistical Service for the month of September indicate a marginal drop in inflation from 12.9% in August to 12.6% representing a 0.3% decrease.

The September ease in inflationary pressures comes after four months of inflationary hikes, mostly as a result of marginal decreases in the food and beverage sub-group combined with negative change experienced in the non-food sub-group.

Notwithstanding the marginal change, response from the business community has been positive, basing their confidence on the reversal that has taken place.

Economists hold that the change reflects the economy's resilience to the rising oil price shock on the domestic economy and fiscal prudence on behalf of public fund expenditure even as election fever grips the nation.

Government will most probably miss its end-year forecast of single digit inflation mostly because of the turtle-paced rate of declaration experienced since April when inflation more than halved from 22.4% by end January to 10.5%.

Much as the September reverse will boost investor confidence in the economy, it could trigger more investment opportunities even if government fails to keep inflation below double digits.

In the long term, efforts to curb inflation will go through the toughest test when full deregulation of the petroleum sub-sector happens early next year.

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