People feel disconnected from the drop in inflation rate because of the misunderstanding of what the downward trend means, an economist at the University of Ghana Business School (UGBS), Professor Patrick Asuming has said.
He explained that the drop does not mean prices of goods and services are reducing.
“I will understand why people will feel disconnected from the numbers that the statistical service put out as the rate of inflation. One reason is that people have some misunderstanding of what the inflation rate is.
“So when we say the inflation rate has reduced it doesn’t mean prices have reduced. if you compare the rate for last month, it was 25 percent, this month it has gone down to 23.1 percent, it doesn’t mean that prices have fallen, it means that prices are rising but slowly.
“So the rate at which prices are rising is slowing down. That is one part of the misunderstanding,” he said on the Ghana Tonight show on TV3 on Wednesday, June 12.
Prof Asuming however expressed surprise at the drop in the rate after observing that the drop in inflation comes at a time when the Cedi has decreased against the dollar and also the cost of production inching up.
“I have to say I was a little surprised to see the inflation rate coming down. I was expecting that we might see some marginal increase.
“That is because within the period we have seen the currency depreciate a lot, especially between April and May and also we have seen the underlying cost of production go up,” he said.
The Ghana Statistical Service announced on Wednesday that inflation for the month of May 2024 went down to 23.1%.
This represented a decline of 1.95 percentage points from the figure recorded in April, 25%.
Food inflation declined by 4.2% to 22.6% while non-food inflation increased to 23.6%, vegetables, tubers and plantains recorded the highest contribution of 3.6% percentage points to the food inflation’s 22.6%, the GSS added.
This was followed by ready-made food and fish and other sea food being the next food sub-classes with the highest contribution to food inflation.
