Government has been admonished to review its approach to tackling rising inflation.

According to Economist, Dr. Kojo Aboagye-Debrah, the Bank of Ghana’s demand-focused Inflation-Targeting framework appears to be failing.

Speaking to an Accra-based TV station, he called for a different framework for inflation management in the country.

“The upward trend now is calling for the need to abandon the whole inflation-targeting and begin to look at a more wholistic approach in dealing with inflation management in Ghana", he said.

Dr. Aboagye-Debrah added, “It’s a goods market and price is determined by the forces of demand and supply and you cannot use only the demand approach to resolve one because even under the demand, Bank of Ghana can only look at the money supply but what about the government spending which is the Ministry of Finance.”

His comments follows Ghana’s annual inflation rate rising slightly for the second month running to 42.5% in June 2023, from 42.2% in the prior month and well above the Bank of Ghana’s target band of 6% to 10%.

The acceleration in overall inflation was largely driven by rising prices of food and beverages (54.2% in June 2023, from 51.8% in May 2023). Conversely, non-food inflation moderated (33.4% in June 2023, from 34.6% in May 2023).

On a monthly basis, consumer prices increased by 3.2% in June 2023, slowing from a 4.8% jump in the prior month, which was the steepest in six months.

Role of ministries

Dr. Aboagye-Debrah believes the relevant ministries have a role to play in managing the general increase in prices of goods and services, hence the need to set Key Performance Indicators for these state institutions.

“The current upward trend now is driven by food, therefore there is the need for the Ministry of Agriculture to be seen as an accountable source because food accounts significantly in terms of the CPI [Consumer Price Index] and as a result, in terms if KPIs, the Ministry should be task.”

He added that Government’s much-touted Planting for Food and Jobs has not yielded the desired results of helping control the rising inflation.