Deputy General Secretary of Trades Union Congress (TUC), Dr Kwabena Nyarko Otoo has cautioned that Ghana’s declining inflation rate should not be interpreted to mean that the prices of goods and services are falling.

Speaking on Joy FM’s Super Morning Show on August 25, he explained that although inflation has dropped significantly over the past one-and-a-half years, consumers are still paying much more for essential goods and services than they did previously.

According to him, the fall in inflation simply means that the rate at which prices are increasing has slowed, rather than prices actually declining.

“Falling inflation does not mean that prices are not increasing,” Dr Otoo explained.

He said the distinction is important because many Ghanaians may expect lower inflation to translate directly into cheaper goods and services.

“The rate of growth of price has updated a little bit. But you see, the original price is still there,” he said.

Dr Otoo pointed out that prices have already reached significantly higher levels, meaning that even when inflation slows, consumers continue to bear the impact of previous price increases.

He used the housing market to illustrate the situation, noting that the cost of renting a two-bedroom property has not returned to the levels seen before the sharp increases in the cost of living.

“The original two-bedroom rental price hasn’t gone down. In fact, it’s increasing, as we show, at a slower rate,” he added.

He explained that this creates a difficult situation for households because incomes have not necessarily increased at the same pace as the cost of goods and services.

According to Dr Otoo, the gap between income growth and price levels continues to put pressure on household budgets, despite the improvement in the inflation rate.

He further noted that the current situation provides some relief because prices are no longer increasing as rapidly as they were previously.

However, he stressed that this should not be confused with an actual reduction in the prices consumers are paying.

Dr Otoo comments highlight the difference between falling inflation and falling prices. While lower inflation indicates that the pace of price increases is slowing, it does not automatically reverse the price increases that have already occurred.

He therefore urged stakeholders to look beyond the headline inflation figure and consider the actual prices consumers face in their daily lives, particularly when assessing the country’s cost-of-living situation.