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The Institute of Economic Affairs (IEA) Ghana has urged the Government to take measures to curb food inflation as part of its strategy to manage overall inflation in the country. This call comes amidst a consistent pattern where food inflation has outpaced non-food inflation, despite overall inflation remaining relatively stable since December 2023.
Dr. John K. Kwakye, Director of Research at IEA Ghana, emphasized the significance of addressing food inflation, given that food constitutes nearly 44% of the Consumer Price Index (CPI) basket. Speaking during a press briefing in Accra to share the Institute’s reactions to President Akufo-Addo’s State of the Nation Address and the Monetary Policy Committee Decision, Dr. Kwakye highlighted the need to recognize and address the role of food inflation in driving recent inflation trends.
The Governor of the Bank of Ghana, Dr. Ernest Addison, reported a decline in headline inflation to 23.2% in February, down from 23.5% in January 2024. This decline was attributed to decreases in both food and non-food inflation rates. Dr. Kwakye underscored the importance of acknowledging the role of food inflation, stating that controlling inflation requires considering food inflation alongside other factors.
Regarding currency stability, Dr. Addison noted a 6.8% depreciation of the Ghana Cedi against the US Dollar in the year up to March 20, 2024, but expressed optimism about the cedi’s ongoing recovery. However, Dr. Kwakye countered this optimism, stating that the cedi’s depreciation persisted, nearing GHS 13 to the dollar.
Dr. Kwakye criticized the reliance on external sources such as the International Monetary Fund, World Bank, and Eurobonds to bolster the cedi, labeling it as a short-term and unsustainable solution. Instead, he advocated for strategies to enhance foreign exchange earnings through maximizing the value of natural resources and reducing import dependency through domestic industrialization and fiscal discipline.
IEA Ghana calls upon the Government to address food inflation as a key component of managing overall inflation and advocates for sustainable strategies to stabilize the currency and enhance economic resilience.
