What is Inflation?
Inflation refers to the sustained increase in the general price level of goods and services in an economy over time, leading to a decline in consumers’ purchasing power. The inflation rate is typically measured as the annual percentage change in the Consumer Price Index (CPI).
Inflation often arises when demand for goods and services exceeds available supply, causing prices to rise.While moderate inflation is normal, excessive inflation can harm the economy, leading to higher unemployment and slower economic growth.
Factors Contributing to Inflation
Inflation can be triggered by several factors, including:
- Rise in fuel prices
- Increase in the money supply
- Currency devaluation
- Demand-pull inflation – when demand for goods and services exceeds supply
Recent Inflation Trends in Ghana
Ghana has been experiencing rising inflation rates in recent months. As of December 2024, the annual consumer inflation rate increased for the fourth consecutive month, reaching 23.8%, up from 23% in November.This marks the highest inflation rate since April 2024.
The surge in inflation is primarily driven by rising food and non-alcoholic beverage prices, with food inflation reaching 27.8% in December.Non-food inflation also saw an increase, standing at 20.3% during the same period.
Government Response
Despite efforts to control inflation through monetary policies, including interest rate hikes, the Ghanaian government has struggled to meet its inflation targets.The end-year inflation target for 2024 was set at 15%, which was significantly missed as the actual rate reached 23.8%.
Conclusion
Ghana’s rising inflation highlights the ongoing economic challenges the country faces. Addressing these issues requires effective policy measures to stabilize prices and protect consumers’ purchasing power
