Govt, BoG should team up to deal with supply side which is the source of high inflation – John Kwakye

Dr John Kwakye
Google search engine

Director of Research at the Institute of Economic Affairs (IEA), Dr John Kwakye, has said that high inflation rate cannot be tackled effectively with only demand management tool.

He stated that the supply side of the drivers of inflation – food, fuel and exchange rate, should also be targeted by the managers of the economy.

Speaking at the 3businesscolloquium organized by Media General in Accra on Wednesday July 6, Dr Kwakye said “Inflation is coming mostly from food, fuel and the exchange rate is also a factor, so they are mainly supply side of the factors. That type of inflation, you can’t fight it with a demand management tool effectively.

“So we have said that the central bank and government should to work together to address to target the very source of of the inflation. We are not saying do away with the inflation targeting framework.

“It should still be there but you should also look at the supply side, the cost side that are driving your inflation.”

“In fact, even in the US, UK, they are struggling to keep inflation and this is exactly because we are all facing a different type of inflation now all over the world. So we are saying that here, the central bank and government should work more closely together in fighting inflation.”

Inflation rate in May 2022 recorded 27.6% from the 23.6% recorded in April 2022, the Ghana Statistical Service (GS) announced.

The Government Statistician, Professor Kobina Annim, explained at a press conference in Accra on Wednesday June 8 that the rate of inflations for Transport (39.0%), Household Equipment and Maintenance (33.8%), Housing, Water, Gas and Electricity(32.3%) and Food and Non-Alcoholic Beverages (30.1.6%) were higher than the national average (27.6%).

Regarding food inflation five sub-classes record inflation rates higher than the overall food inflation (30.1%) in May.

The inflation for imported goods was 28.2%, which is higher than the 24.7% recorded for April 2022, while the inflation for locally produced items was 27.3%, up from the 23.0% recorded in April 2022.

By Laud Nartey|3news.com|Ghana

Google search engine