You must be suffering from “money illusion” if you think slowing inflation means a declining cost of living – Kwakye
The Director of Research at the Institute of Economic Affairs (IEA), Dr John Kwakye has reiterated his point that the slowing of inflation does not mean prices of goods and services are dropping.
Persons who believe that the cost of living is coming down because of the slowing of inflation must be suffering from money illusion, he said.
He explained that the reduction in inflation only means that the cost of living is still increasing but at a slower pace.
“Anyone who thinks the slowing inflation in Ghana means a declining cost of living must be suffering from ‘money illusion.’ This is because it is not. It only means that the cost of living is still increasing, but at a slower pace,” he wrote on his X platform.
The inflation rate for the month of June has dropped to 22.8 percent, the Government Statistician, Professor Samuel Kobina Anim, announced.
Drop in inflation rate only means prices are increasing at a reduced pace – John Kwakye
Prof Anim stated that the drop represents a decline of 0.3 percentage points from that of the month of May which was at 23.1 percent.
He said this at a press conference in Accra on Wednesday, July 10, 2024.
“The year-on-year inflation for June 2024 stood at 22.8 percent, signalling that between June 2023 and June 2024, the prices of goods and services went up by 22.8 percent. This rate of inflation indicates a slowdown by 0.3 percentage points on a month-on-month basis as the rate for May 2024 stood at 23.1 percent,” he said.
Four divisions recorded an inflation rate higher than the overall inflation of 22.8 percent.
Alcoholic Beverages, Tabacco and narcotics recorded 32.3 percent, Restaurants and accommodation services recorded 30.7 percent, Housing, water, electricity also had 26 percent while and food and non-alcoholic beverages recorded 24 percent higher inflation than the overall rate of inflation of 22.8 percent for June 2024.
Prof. Anim added that “the Upper East region recorded the highest rate of inflation with 35.20 percent, with the Oti region recording a rate of 12.5 percent.”
He further stated that “The question on the exchange rate is always an important one that is why we have provided a trend analysis from June 2023 to June 2024. The dominance of the inflation on imported items can be aligned to the exchange rate stability.”
