Petroleum, Food drives producer inflation upwards in December

Producer price inflation for December 2019 increased sharply by 3.1 percent to record 13.0 percent, year on year, from 9.9 percent recorded in previous month.

This has largely been attributed to the surge in producer price inflation of the manufacturing sector. The drivers price inflation of this sub-sector during the period were the manufacturing of petroleum products and food products and beverages.

The manufacturing sub-sector recorded the lowest year-on-year producer inflation rate among the three sub sectors that make up industry, of 8.8 percent. However, this sub-sector constitutes more than two-thirds of total industry and thus still managed to raise the overall rate . The mining and quarrying sub-sector recorded the highest year-on-year producer price inflation rate of 33.7 percent, followed by the utilities sub-sector with 12.8 percent.

The Producer Price Index (PPI) measures the average change over time in the prices received by domestic producers for the production of their goods and services.

At the release of December 2019 producer price inflation data, Mrs. Araba Forson, Deputy Government Statistician said the increase in the manufacturing sub-sector was due to the increases in the inflation rate of the manufacturing of petroleum products and manufacturing of food products and beverages.

“The increase in the rate for manufacturing of petroleum products from -1.7 percent in November 2019 to 8.2 percent in December 2019, was due to the 4.0 percent increase in the ex-factory prices of petroleum products and depreciation of the cedi,” Mrs. Forson explained.

Petroleum accounts for about 23 percent of the entire manufacturing sub-sector.

Petroleum Inflation Trend

The producer inflation rate in the petroleum subsector was 10.1 percent in December 2018. The rate decreased to record 3.8 percent in January 2019. Thereafter, the rate increased consistently to record 17.2 percent in April 2019, but declined to 1.2 percent in June 2019. However, it increased to 3.1 percent in August 2019 but declined to -5.7 percent in October 2019. The rate increased consistently to record 8.2 percent in December 2019.

The manufacture of food and beverages increased from 1.3 percent in November 2019 to 14.2 percent in December 2019. This was due to increases in the prices of diary products and processed food, as well as the depreciation of the cedi.

PPI Trends

In December 2018, the producer price inflation rate for all industry was 4.4 percent. The rate declined to 3.4 percent in January 2019. Thereafter, it resumed an upward trend to record 7.1 percent in April 2019 but declined to 6.7 percent in May 2019. Subsequently, it increased consistently to record 10.2 percent in August 2019 but declined to 8.9 percent in October, 2019. The rate then increased consistently to record 13.0 percent in December 2019.