Monetary Policy
MPC Press Release - September 2005
Friday, 30 September 2005 00:00

Macroeconomic developments through the first two months of the third quarter of the year indicate that inflationary expectations remain increasingly subdued, the exchange rate stable, and the external payments position relatively strong. This is against the background of continued fiscal consolidation underpinned by robust revenue growth and with government spending kept close to budgeted levels.

Developments in the Consumer Price Index through July 2005, indicate that inflation is firmly on the decline and prices are increasing at a slower pace than in the same period in 2004. Headline consumer price Inflation fell for the fourth consecutive month from 16.7 percent in March 2005 to 14.9 percent in July on a year-on-year basis.

The decline in Inflation has been more broad-based, driven by the continued slowdown in both food and non-food price inflation. For the fifth consecutive time, the monthly increase in the food price index dropped from 1.5 percent in June 2005 to 0.4 percent in July, while that of the non-food price index declined from 0.3 percent to 0.2 percent. The Bank of Ghana’s measures of core inflation continue to be stable within a narrow range remaining below the headline inflation.

The budgetary results for the first half of the year (January-June 2005) indicate that domestic tax revenue growth continues to be robust, and was at the equivalent of 20.2 percent of GDP (on an annualized basis). Total tax revenue amounted to ¢9,682 billion, a 24.0 percent increase over the same period in 2004. However, non-Tax revenue amounted to ¢328.0 billion, significantly short of the budget target of ¢739.6 billion.

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