Inflation will remain lower this year than what was experienced last year, according to a report. Inflation started 2009 at about 20 percent but ended the year at 15.97 percent. According to the report conduct by Databank Research Department, inflation would be lower in 2010 than in 2009 due to favorable pricing developments over the next two months, while currency risk remains favorable. There is also the potential for improved agrarian yields this year on better weather patterns. However, the single digit inflation or government’s target of 9.5 percent captured in the 2010 fiscal Budget would be missed, the report, which was conducted by a team led by Sampson Akligoh, Senior Economic Analyst stated. This is because increases in fiscal spending from higher wages and utility tariffs and anticipated lowering of interest rates in the third quarter is likely to prevent inflation from reaching single-digits by the end of the year. Average consumer prices declined for the fifth consecutive time this year, recording 10.68 percent in May. According to the study, improvement in the year-on-year inflation figures would continue to reflect improvements on the pricing front this year compared to 2009. Monthly inflation, however, edged up to 1.87 percent in May 2010 from 1.41 percent in April 2010 which indicates a build up of mild inflationary pressures. Food inflation fell to 4.69 percent in May 2010 from 5.81 percent in Apr 2010, while non-food inflation also declined from 14.98 percent to 15.82 percent during the same period. The decline in May’s inflation rate, Mr. Akligoh said, would undoubtedly enhance macroeconomic stability going forward. Nevertheless, the ultra-low figures, he said, would also reflect a rather sluggish rebound in the pace of economic activity. Meanwhile, the Eastern and Greater Accra regions recorded single digit inflation rates in May 2010. While Eastern region recorded an inflation of 3.58 percent as against 6.76 percent in April 2010, Greater Accra region recorded an inflation rate of 5.71 percent (3.88 percent for food and 6.86 percent for non-food). This suggests that prices of items are low in these regions. All the other regions recorded inflation above the national average of 10.68 in May 2010. Ashanti (11.72), Northern (11.89), Western (12.72) and Volta region (14.23) regions recorded inflation rates above the national average. Brong Ahafo, Central and Upper East and West Regions recorded 16.69, 17.95 and 18.87 percent inflation respectively. For the 11th consecutive time, inflation eased further, recording 10.68 percent in May 2010 as against 11.66 percent recorded in April 2010. However, it is unclear whether the single digit inflation that the government has targeted would be achieved. This appears to have kept lending rates at an average of 33 percent. Source: Business Guide/Ghana