Real and fiscal sectors should join in fight against inflation - Economist

Inflation jumps to 27.3% in May

BoG revises policy rate to 19%

Inflation stemming from supply side, Economist

Economist, Dr. Adu Sarkodie has stated that the Bank of Ghana should not be the only body making policies to check the country’s rising inflation.

He noted that whiles the Central Bank is focusing on the monetary

Read full articlepolicy side of the economy, government must also check other factors such as spending and borrowing.

The BoG has revised the policy rate from 17% to 19% to address the inflation rate which currently stands at 27.3%.

But the economist believes that since inflation is largely from the supply side, its policy interventions may not yield much.

“Let’s admit that our inflation rate is too high. Unfortunately for us as a country, a greater part of our inflation is the supply side inflation and therefore the approach by the Central Bank to fight inflation is ineffective,” he said on Citi News.

Data from the Ghana Statistical Service revealed that inflation for the month of May hit 27.3% percent.

It is in this light that the economist is calling for joint effort from all sectors of the economy to help deal with the issue.

“The Governor himself has admitted that it’s a supply-side inflation. So, it should be a comprehensive approach. While the bank is doing its bid with the policy rate, the real sector and fiscal sector must be doing theirs to [reduce] the public debt and borrowing because if the Central Bank wants to control inflation, and government ends up spending more than revenue and keeps borrowing amidst the Cedi depreciation, it will amount to nothing,” he mentioned.