Ghana’s annual producer price inflation accelerated to 27.8% in March 2014, its highest level since January 2010, from 27.1% in February, data by Ghana Statistical Service showed. The increase came mainly as a result of a 14.5% y/y rise in producer prices in the mining sector, following a 3.1% y/y growth in February. Prices in the manufacturing sector, which constitutes more than two-thirds of total industry, increased 25% y/y last month, easing from a 27.2% growth in February. Utilities prices rose 56.1% y/y after a 55.7% y/y growth in February.
Compared to the previous month, producer prices grew 3.1% in March following a 2.9% increase the month before. Prices in the mining prices rose 8.5% m/m, manufacturing prices grew 2.5% m/m and utilities prices edged up 0.3% m/m.
The West African country is a major producer of gold, oil and cocoa.
Producer prices are a key preliminary indicator for the dynamics in consumer price inflation, so we could expect consumer price inflation to rise further after hitting a four-year high of 14.5% in March, drifting further away from the central bank's target band of 2pps either side of 9.5%.
On April 2, Ghana’s central bank maintained its policy rate at 18% after a 200bps hike at an emergency meeting in February that was aimed to limit a drop in the local cedi currency amid a widespread emerging market currency turmoil. The Bank of Ghana noted that although the risks to inflation remain high, the impulses from the recent monetary policy hike are still working through the system. It forecasts inflation to fall back within its target band towards the end of the first half of 2015.
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