Monetary Policy
MPC Press Release - November 2004
Tuesday, 30 November 2004 00:00

A review of the latest economic data and information that has become available since the last MPC meeting suggests that inflationary pressures continued to be subdued, and the cedi exchange rate was relatively stable, underpinned by a significant improvement in the fiscal and external payments positions. Domestic demand and economic activity have also been strong and the prospect is for a higher GDP growth than initially forecast for 2004.

Headline inflation, measured by the year-on-year increase in the overall consumer price index rose from 11.9 percent at the end of June to within a narrow range of 12.4 percent and 12.9 percent in the third quarter and above the desired single-digit threshold. Headline inflation declined marginally from 12.9 percent in August, to 12.6 percent by September 2004, driven by a combination of improved food supply conditions and slower increase in non-food prices.

The third quarter price data indicates that the economy has not experienced the sharp seasonal food price decline normally associated with the third quarter. While food prices declined by 3.8 percent in the third quarter of 2003, they fell by only 0.4 percent over the same period in 2004. But non-food price inflation has continued to decline from 10.4 percent at the end of July to 5.3 percent by the end of September 2004. The current rate of nonfood inflation is the lowest recorded in the last several years. The Bank of Ghana’s measures of core inflation continue to indicate that underlying price pressures are subdued.

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