Fuel, 13 key food items drive inflation, for seven years
The Ghana Statistical Service (GSS) has identified key contributors to the country’s inflation for the last seven years, with food items and fuel emerging as significant drivers.
It highlighted 15 key items driving inflation, 13 of which were food-related and included imported rice, bread, beef, yam, fresh tomatoes, cooked rice with stew, kenkey with fish, fried plantain with beans, smoked river fish, smoked herring, local gin, sea fish and large onions identified as dominant drivers of inflation.
On the other hand, non-food variables that are major contributors included petrol, bus and ‘trotro’ fares.
This revelation came during a stakeholder engagement hosted by GSS to analyse historical trends in consumer price indices (CPI) and inflation during the past seven years.
The analysis was conducted using price-data collected for the computation of monthly CPI and inflation over the last seven years. It aimed at providing insights into how the prices of selected items impact overall inflation.
It also sought to provide information that will support the development of targetted and strategic interventions aimed at reducing inflation, particularly food inflation.
Presenting the data, a data scientist at GSS, Simon Tichutab Onilimor, reiterated that: “Findings revealed that 13 of 15 items consistently contributing to inflation are food products, with fuel and transportation costs, specifically bus and trotro fares, as the only non-food items”.
He elaborated that some items exert an indirect influence on inflation through a pass-through effect. For instance, he noted fuel prices have a significant pass-through effect – influencing transportation costs and subsequently driving up food prices.
He added transportation costs alone ranked among the top contributors to inflation 70 times in 72 data points, alongside unprocessed food items like yam and fresh tomatoes.
Seasonal effects
Seasonal impacts were also evident in items like yam and fresh tomatoes. The data showed consistent price drops for yam between August and September each year, reflecting harvest season dynamics. Fresh tomatoes exhibited significant price volatility, with notable peaks during certain periods.
To address some of these concerns impacting inflation, he emphasised the need for strategic measures such as buffer stocks to stabilise prices during periods of low supply.
“Our data show that from August to September each year, yam prices drop marginally during the harvest season. However, without adequate storage facilities or buffer stocks, prices rise steeply in off-seasons, fuelling inflation,” he noted.
The analysis also revealed startling price increases for specific items. For instance, the price of smoked herrings surged by over 400 percent between 2018 and 2024, rising from approximately GHȼ25 per kilogramme to over GHȼ100 per kilogramme.
“This sharp increase can be attributed to changing consumer preferences and rising demand, which exert upward pressure on prices,” he explained.
The analysis also underscored the role of indirect factors like exchange rate fluctuations and interest rates in shaping inflation trends. For example, the country’s reliance on imports means that currency depreciation directly affects the cost of goods while high interest rates increase production costs, further driving inflation.
Solutions
Mr. Onilimor stressed that addressing inflation requires a multi-sectoral approach, involving stakeholders across agriculture, transportation and trade.
“We must evaluate our food production systems, address gaps between farmgate and market prices and improve logistics to ensure affordability. Collaboration among ministries and policymakers is crucial to designing comprehensive solutions for inflation management,” he said.
Discussions among participants also underscored the importance of targetted interventions to address food inflation, which remains the dominant driver of overall inflation.
They pointed out that by improving infrastructure, establishing buffer stocks and enhancing domestic food production, Ghana can mitigate seasonal price fluctuations and stabilise inflation.
“Inflation is not just about numbers; it reflects the daily struggles of Ghanaians to afford basic necessities. Strategic action is essential to ensure economic stability and improve livelihoods,” he noted.
International efforts, he stressed, are crucial to ensuring affordability and achieving the country’s inflation target of 8% ±2 rate indicated by the Bank of Ghana.