Monetary Policy
MPC Press Release - October 2006
Tuesday, 31 October 2006 00:00

The latest inflation numbers show that after three consecutive months of increases in headline inflation, which pushed the inflation rate to 11.4 per cent in July, inflation fell marginally to 11.2 per cent at the end of August. We have been apprised by the Ghana Statistical Service that inflation has dropped further to 10.8 per cent in September.

The downturn in headline inflation has been driven mainly by favourable supply of food items and an ease in non-food prices after a sharp rise of 3.6 per cent in July, an indication that the pass-through effects of petroleum prices is ending. All the Bank’s measures of core inflation indicate some easing in underlying inflation, and a return to the path of convergence towards a low inflation path.

Available data for the third quarter of the year indicates that economic activity continues to be robust. The Bank’s Composite Index of Economic Activity increased by 10.6 per cent in real terms (year-on-year), which was above the trend growth rate of 9.9 per cent. Driving this pace of activity were manufacturing sales, tourist arrivals and private sector contributors to SSNIT, all of which rose significantly in the third quarter over the second quarter levels.

Third quarter growth rates for domestic VAT, industrial consumption of electricity and exports, were marginally below those recorded for the second quarter. Cumulative purchases of cocoa for the 2005/2006 season through September 2006 were 740,458 metric tonnes, exceeding the projected total purchases for the season of 550,000 metric tonnes.

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