Cedi fall fires Ghana’s July 2012 inflation up 9.5%

The negative effect on the economy of the cedi’s fall against the dollar in recent times seems not to be going despite tight policies made by the Bank of Ghana (BoG) to curb the situation.

Today, August 16, 2012, the Ghana Statistical Service (GSS) announced that annual inflation rate in July rose to 9.5% from the 9.4% recorded in June.

Officials of the GSS blamed the rise in inflation on the pressure on the cedi, the country’s official currency.

A team from the International Monetary Fund in July, 2012 said Ghana’s reaction to the fall of the cedi against the US dollar has been slow.

“Monetary policy has reacted slowly to the sharp cedi depreciation and the associated inflation risks,” Naoyuki Shinohara, Deputy IMF Managing Director said in a statement July 13, 2012.

Mr Magnus Ebo Duncan, Head of Economics Statistics, GSS, pinned the inflation increase on the depreciation of the cedi against the dollar which contributed to the inflation rate in imported food items, the Reuters news agency reported today August 15, 2012.

“The exchange rate depreciation has made some imported foods more expensive and their weight on inflation is huge,” Reuters quoted Mr Duncan as saying.

Ghana’s annual inflation rose for a fourth straight month in June 2012, reaching 9.4%, according to GSS figures.

The cedi fell by 15.1% against the US dollar during the first five months of 2012, the BoG said June 13, 2012.

Meanwhile, the cedi is reported to have held firm against the dollar on Monday due to light corporate demand for the greenback and recent inflows from mining companies.

The cedi-dollar rate was pegged at 1.9500-1.9540 on the interbank market, holding some slim gains from late last week, according to a Reuters report August 14, 2012 citing Jacob Brobbey, a trader with Barclays Bank Ghana.

By Ekow Quandzie