Monetary Policy
MPC Press Release- March 2008
Monday, 31 March 2008 00:00

As our economy is truly open to the global market, highly open to international trade and capital flows, these developments cannot but affect the outlook in a way dependent upon our policies and circumstances, especially where changes in commodity prices are concerned.

You would like to know that available information and indicators continue to point to a fairly resilient economic activity and both business and consumer expectations continue to be positive about economic prospects for 2008.

The Bank’s Composite Index of Economic Activity grew by 27.5 percent in year-on-year terms at the end of January 2008, above the trend growth of 21.2 percent. This compares with 22.5 percent recorded in the same period of 2007. The increase in economic activity in the first month of the year was broad-based with all the sub-components showing strong growth, except the pace of domestic VAT collections which recorded some slowdown in the month, consistent with seasonal patterns.

The Bank’s survey of Business and Consumer Confidence early into the year point to positive expectations for 2008, with household and industry showing more optimism in their assessment of economic conditions and prospects. Consumer Confidence remained generally high and Business Confidence strengthened relative to the preceding quarter.

The latest inflation numbers released by the Ghana Statistical Service (GSS) show that the upturn in headline inflation which began in October 2007 continued into the first two months of 2008. Consumer price inflation increased from 12.7 percent in December 2007 to 12.8 percent in January and further to 13.2 percent in February 2008.

Much of this rise in inflation has been the result of pass-through of crude oil prices on the domestic market, and rising food prices and utility price adjustments. Also core inflation (defined to exclude energy and utility items) has increased consistently for the past five (5) months along with increases in similar indicators tracking underlying inflationary pressures.

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