The general prices of goods and services in the country fell by 0.4 percentage points to 9 percent, the lowest ever recorded since January 2013 when the rate hit 8.8 percent, making a strong case for the Bank of Ghana to further cut policy rate.

The fall, according to the Ghana Statistical Service (GSS) data, can be attributed to decline in the rates of both food and non-food baskets. The rate in the food and non-alcoholic basket group fell by 0.7 percentage points to 8 percent from the previous month; whereas the non-food basket’s rate also saw a decline of 0.3 percentage points to 9.5.

If things follow in this trend, it will provide room for the Central Bank to further cut policy rate as inflationary pressures determine, to a large extent, the policy rate direction of the economy, giving space for banks to also reduce interest rates to encourage lending to the private sector.

Governor of the Bank of Ghana, Dr. Ernest Addison underscored this when the bank cut the policy rate by 100 basis points to 16 percent last month.

“The Committee also noted that inflation has steadily declined from 15.4 percent at the end of 2016, to 11.8 percent in 2017 and further down to 9.4 percent in 2018, supported in large part by non-food inflation. The Bank’s latest forecast shows that inflation will remain within the target band of 8±2 percent over the forecast horizon, barring any unanticipated shocks.

The Committee noted that immediate risks to the disinflation path are well contained, and the current conditions provide scope to translate some of the gains in the macro stability to the economy. Under the circumstances, the Committee decided to reduce the policy rate by 100 basis points to 16 percent,” he said at a press conference in Accra.