High Inflation: Most businesses likely to collapse – Economic expert

Rev. Dr. Worlanyo Mensah, an economic expert, consultant and senior lecturer at the Wisconsin University, has revealed that most businesses are likely to collapse as a result of the hike in Ghana’s inflation rate.

Ghana Statistical Service (GSS) has revealed that the surge in food prices has driven the inflation for the month of April 2022 to 23.6%.

This 23.6% is the highest since January 2004.

According to the GSS, four divisions – Transport (33.5%); Household Equipment and Routine Maintenance (28.5%); Food and Non-Alcoholic Beverages (25.6%), and Housing, Water, Electricity, Gas and Other Fuels (25.0%) recorded inflation rates above the national average of 23.6% with Transport recording the highest inflation.

National month-on-month inflation from March 2022 to April 2022 was 5.1%.

Whilst Food and Non-Alcoholic Beverages inflation was 26.6%, Non-Food inflation stood at 21.3%.

April 2022 food inflation (26.6%) is higher than both March 2022 food inflation (22.4%) and the average of the previous 12 months (13.5%). Food inflation’s contribution to total inflation, however, decreased from 51.4% in March 2022 to 50.0% in April 2022.

Speaking to the host of Atinka FM’s AM Drive, Kaakyire Ofori Ayim, economic expert Dr Worlanyo Mensah stated that the high inflation rate would reflect in the price of raw materials.

He mentioned that products would come at additional costs that would make the standard of living very difficult.

“People will now be visiting the hospital frequently because things will become difficult, and people will not be able to afford good meals. When there is an increase in inflation, it really pushes the economy out of gear, especially when the inflation is more than 10%; it really affects businesses, and so most businesses are likely to collapse because, by all means, when there is an increase in inflation, it affects raw materials and so if you are going to buy raw materials before going into productivity, invariably, it is going to affect the unit cost of the product,” Dr Worlanyo Mensah told Kaakyire Ofori Ayim.