Pressure on short term interest rates to ease

The consumer inflation has slowed for a second consecutive month in September 2019, recording 7.6 percent, a decline of 0.2 percentage points from its August level.

While it is not possible to directly compare the inflation levels of the past two months with previous periods because Consumer Price Index computations have been rebased, the decline in September al least confirms a downward trend.

This is according to the latest data released by the Ghana Statistical Service (GSS) on Wednesday.

The sharp fall in headline inflation during the third quarter of the year – although in part the result of the recent rebasing of inflation computations – is expected to exert downward pressure on short term interest rates, despite the Bank of Ghana’s maintenance of its benchmark Monetary Policy Rate at 16 percent since the first quarter of the year.

The Government Statistician, Prof. Kobina Annim noted that key drivers of inflation for September were Alcoholic Beverages, Tobacco and Narcotics at 12.2 percent and Housing, Water, Electricity, gas and other fuels at 10.0 percent.

The Consumer Price Index (CPI) measures the change over time in the general price level of goods and services that households acquire for the purpose of consumption.

With this further slowdown of the key monetary indicator, market analysts expect that this will have an impact on the government treasury market, where it is expected that yields on the short-end of the yield curve will drop in the coming weeks, all other factors being equal.

For this week, prior to the latest inflation announcement, the yields on the 91-Day inched upwards by one basis point to 14.69 percent, whereas the 182-Day dropped from 15.15 percent to 15.14 percent.


The Food and non-alcoholic beverages group recorded a year-on-year inflation rate of 8.5 percent, representing 0.3 percentage point higher than the rate recorded in August 2019.

Six subgroups recorded inflation rates higher than the group’s average rate of 8.5 percent.

The Non-food group recorded a year-on-year inflation rate of 7.0 percent in September 2019, declining by 0.4 percentage point compared to the 7.4 percent recorded for August 2019.

Tobacco and Narcotics, Housing, water, electricity, gas and other fuels, Transport and Recreation, sport and culture were the key drivers of the non-food inflation in September.


At the regional level, the year-on-year inflation rate ranged from 3.8 percent for Eastern region to 11.8 percent for Greater Accra region.

Four regions; Greater Accra, Central, Upper West and Volta, recorded inflation rates above the national average of 7.6 percent. Eastern region recorded the least inflation rate of 3.8 percent.

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