Monetary Policy
MPC Press Release- March 2005
Thursday, 31 March 2005 00:00

Consumer price Inflation fell again from 11.8 percent in December to 11.6 percent in January, on a year-on-year basis. Inflation moved up to 14.0 percent in February with the recent 50.0 percent increase in petroleum prices as part of the industry deregulation. The Consumer Price Index rose by 4.8 percent, compared with 0.9 percent in January 2005 and with 2.5 percent in February 2004. The non-food index increased by 6.8 percent compared with 1.9 percent in the same month last year.

The major sources of pressures on the consumer price index in February emanate from the non-food sector; transport and communication, housing and utilities, medical care, and recreational and entertainment sectors. Year-on-year non-food price inflation increased from 7.9 percent in January to 13.1 percent in February. On a monthly basis, food price index rose by 2.9 percent, compared with 1.2 percent in January 2005 and 3.1 percent in February 2004. Helped by an improved food supply situation, the year-on-year food price inflation eased from 15.2 percent to 14.9 percent. The Bank of Ghana’s measures of core inflation continue to be stable within a narrow range, with three of the five measures in the single digit range.

The latest numbers show that the growth of the monetary aggregates has continued the slow down from the levels observed in the fourth quarter of 2004. At the end of February 2005, year-on-year growth of reserve money stood at 19.7 percent, down from 34.3 percent in February 2004. Broad money M2 growth had similarly declined from 50.1 percent in January 2004 to 14.9 percent by January 2005 (the latest data available). M2+ growth has also slowed significantly from 39.3 percent in January 2004 to 20.5 percent by January 2005.

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