Producer Price Inflation dips by 400bps; now 30.3% in May 2023

Ghana’s Producer Price Inflation (PPI) witnessed a significant decrease of 4% (400bps) to 30.3% in May 2023, according to recent data released by the Ghana Statistical Service. The month-on-month change between April and May showed a decline of -2.7% in the PPI.

The report highlights the performance of different sectors, including industry-less construction, construction, and services, shedding light on their respective inflation rates. Additionally, it identifies key industries that contributed to inflation, with some sectors experiencing rates above the national average.

Sector Performance and Inflation Rates:

The industry-less construction sector recorded a PPI of 32.5% in May 2023, a decline from the previous month’s figure of 37.1%. Similarly, the construction sector saw a decrease in inflation, dropping to 20.0% in May 2023 compared to 20.8% in April 2023. In the services sector, the inflation rate decreased from 19.4% in April 2023 to 18.1% in May 2023.

Among the various industries, several sectors stood out with inflation rates exceeding the national average. The electricity and gas sector recorded the highest rate at 51.8%, followed by accommodation and food service activities at 51.0%, transportation and storage at 50.7%, mining and quarrying at 36.5%, and water supply, sewerage, and waste management at 31.7%. On the other hand, the information and communication industry reported the lowest inflation rate of 11.2% in May 2023.

Industrial PPI and Sub-sector Performance:

The industrial PPI, encompassing all sectors, stood at 32.5% in May 2023. This represents a notable decrease of 4.6 percentage points compared to the previous month’s rate of 37.1%. Within the industrial sector, the mining and quarrying sub-sector experienced a significant decline of 8.6 percentage points, dropping from 45.1% in April 2023 to 36.5% in May 2023. The manufacturing sub-sector, however, saw a marginal decrease of 0.8 percentage points, reaching 25.5% in May 2023.

Inflationary Trends in the Manufacturing Sub-sector:

Within the manufacturing sub-sector, several industries contributed to inflation, with 14 out of 23 major groups reporting rates higher than the sector average of 25.5%. The manufacture of textiles recorded the highest inflation rate of 111.9%, followed closely by the manufacture of pharmaceuticals, medicinal chemical, and botanical products at 97.5%. On the other end of the spectrum, the repair of installation of machinery and equipment had the lowest inflation rate of 0.0% in May 2023.

Ghana’s latest PPI figures reflect a notable decline in inflation, highlighting the performance of various sectors and sub-sectors within the economy. The decrease in PPI signifies potential stabilization in pricing across industries, offering insights into the overall economic landscape. While certain sectors, such as mining and quarrying, textiles, and pharmaceuticals, experienced higher inflation rates, the manufacturing sub-sector as a whole witnessed a slight decrease. These trends provide valuable information for policymakers, businesses, and investors, aiding in decision-making processes and contributing to the broader understanding of Ghana’s economic performance.

Source: Norvanreports