The economic think tank claims that supply and cost issues, notably those related to food, fuel, transportation, and exchange rates, played a significant role in driving the current inflation rate of 33.9% in August 2022.
The IEA stated that "supply and cost issues supporting inflation should be directly targeted with appropriate policy actions" in a statement released on Monday and forwarded to the Ghanaian Times.
Diesel had an inflation rate of 116.9% in August, gasoline had an inflation rate of 80.5%, transportation had an inflation rate of 45.7%, imports had an inflation rate of 34.4%, and food had an inflation rate of 34.4%.
The IEA urged further steps to ensure that food inventories could be easily transferred from farm gates to markets, as well as subsidies on necessities.
Additionally, it recommended, "reducing fuel taxes or levies and using some of the government's windfall revenues from increased oil prices to cushion pump prices, while increasing public transportation and subsidizing fares to cushion the masses."
The IEA also encouraged the BOG to enforce the regulations governing foreign exchange, especially those about traveler carry-on baggage restrictions, currency trading, the pricing of products and services in foreign currencies, and bank-to-bank currency transfers.
The BoG and the government were urged to "work to develop additional targeted measures to combat the inflation situation and also engage with foreign companies to stagger repatriation of their earnings and profits to lessen pressure on the exchange rate," according to the statement.
According to the IEA, interventions focused on supply variables were used instead of a more appropriate tool like inflation targeting in countries, notably big economies, where demand-driven inflation was more common.
According to an economic think tank, several industrialized nations have adopted unconventional and creative policies to protect their populations, and it is now time for the nation's officials to take a similarly proactive approach.
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