Wednesday, 12 May 2021

BoG likely to miss inflation target

 



By Elorm Desewu

The recent hike in petroleum products by the government is likely to threaten the Bank of Ghana’s, (BoG), inflation target of 8±2 percent.

According the BoG, its forecast remain broadly unchanged with headline inflation expected to return to the target band in the second quarter of 2021, assuring that risks to inflation in the near-term are broadly balanced,

Although the BoG has admitted that there are emerging short-term pressures emanating from the rising crude oil prices and the direct and secondary price effects of the revenue measures announced in the 2021 budget, the recent price hike in the petroleum products and the expected rise in transportation fares, may push BoG’s inflation target of 8±2 percent for this second quarter off gear.

Year on year inflation measured by the Consumer Price Index, (CPI), remained flat at 10.3 percent for the 12 months period ended March 2021.

Following the implementation of the newly-reviewed taxes on fuel, the margin on prices of petroleum products went up by 17 pesewas per litre.

But the NPA, after a meeting with stakeholders in the industry, reduced the 17-pesewa margin to 9 pesewas.

 “The 17 pesewas per litre increase in fuel margins, previously announced by the NPA has been reduced to 9 pesewas per litre,” the NPA said in a statement.

 

The government proposed a 5.7 per cent increment in prices of petrol and diesel as part of new levies it is imposing on Ghanaians.

 

Until the recent increment, figures from the pumps showed that prices of petrol and diesel, which were both selling at an average price of GHS 4.7 per litre in December 2020, had risen to an average of GHS 5.74 as of mid-March 2021.

 

Currently, some Oil Marketing Companies (OMC) are displaying GHS 6.13 per litre of fuel at the pumps.

 

Fuel prices in the country have consistently seen a steady increase since the beginning of the year, sparking fears that consumers may end the year paying an all-time high rate per litre.

 

The 2021 budget introduced a new 10 pesewas Sanitation and Pollution Levy as well as a 20 pesewa levy to cater for charges on the country’s excess power capacity subject to parliamentary approval.

 

The Chamber of Petroleum Consumers (COPEC) has indicated that the percentage change in prices within the last two months is an 11% increase.

 

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