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Rising calls for government to take quick measures as Inflation increases from 15.7 % to 19.4%

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According to the Government Statistician, Professor Samuel Kobina Annim , Ghana's inflation rate has risen from 9.84% in 2018 to 15.7% in March 2022 and now risen to an unexpected 19.4% in April 2022. Historical records show the inflation rate fell in 2019 to 7.14% and then it shot up to 9.89% in 2020 and 9.28% in 2021 and now increased by more than a double of the 2021 rate. No wonder, the prices of goods seem increasing almost every day.

Due to the increase in Ghana's inflation rate, many financial analysts have advised citizens to implement various strategies to be able to keep up with the economic situation whilst those in the real estate have lost hope in continuing with their building projects due to the fact that their budgets must be supported by more than twice the projected costs.

Experts have opined that consumer inflation can rise even further to 70% by the close of the year 2022 due to the fact that 19.4% is almost 20%.

The expert analysis comes on the backdrop of the official announcement of the 19.4% inflation rate by the Government Statistician.

In analysing the various recommendations, we can envisage that employees will start mounting pressures on their employers to do something about their remuneration.

Many have asked how they can manage their personal consumption with unchanged incomes upon seeing the double digit inflation that prevails almost reaching 20%.

Indeed, even before the Bank of Ghana looks at the policy rate, we expect that the Ghana reference rate will go up again and loans may just start attracting almost 40 percent interest rate in the coming months.

We also expect that the Bank of Ghana will increase the policy rate further from the prevailing 17% to almost 20% or even more. This will automatically affect the interest on loans making business men to pay more in installment payments.

In fact, food that are unresistible actually suffered the highest rise and food inflation shot up from 17.4% to 22.4%,that is an increase of 500 basis points.

In January 2022, the bank of Ghana kept the monetary policy rate at 14.5% and increased to 17% in March 2022 due to the inflation but many analysts are pushing the regulator to increase the policy rate to a rate higher than the current 19.4% inflation rate. A higher policy rate means that the treasury rate may be increased a bit more than the inflation rate to encourage businesses to invest. If BOG does not increase the policy rate and the treasury bill, the tbill will be unattractive pushing customers to retrieve their investments to rather channel into the public. The disadvantage of having more money in the transaction market is that inflation will not be controlled but rather increased further causing more harm to the economy

Really, we can envisage though times ahead and Dela Michelle of TV3 has asked how the government will manage this inflation jump.

It should be noted that transport fares contributed to the hike from the 15.7% to 19.4%.

We recommend that the Bank of Ghana will quickly adjust the policy rate to 21% to 25% to mob up significant funds from the public space whilst making loans unattractive in the interim. This action will reasonably help to reduce the inflation rate from 19.4% to probably 15% or even lower. A long-term policy should be that the government should reduce demand of goods by increasing supply through supporting the Agricultural sector with funds for expansion whilst reducing price of fuel costs.

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Ghana Samuel Kobina Annim


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