Producer price inflation (PPI) in September 2022 increased further to 45.6% on the back of increases in the industrial sector, data from the Ghana Statistical Service (GSS) has shown.
The PPI, which measures the average change over time in the prices received by domestic producers for the production of their goods and services, increased by 5.9 percentage points from 39.7% logged in the previous month.
Per the Statistical Services, two subsectors – Manufacturing (58.2%) and Mining (57.5%) – of the eight new subsectors recorded rates of producer inflation higher than the national average (45.6%). This contributed about 95% of the 45.6% headline PPI.
With the exception of Information and Communication and Construction, all the other six sub-sectors recorded an increase in year-on-year producer inflation between August and September 2022.
The highest change was recorded in the Electricity and Gas sub-sector, increasing from 8.6% in August to 24% in September 2022.
Electricity and water had the highest monthly producer inflation of 14.2% and 9.2% respectively.
PPI rebased
The country’s PPI has been rebased with index reference of March 2020 – February 2021, equal to 100 points.
With this rebasing, there has been an expansion and reclassification of coverage for sectors from three to eight: thus from manufacturing, mining and quarrying and utilities, to include water supply, sewerage and waste management; electricity and gas, construction, transport and storage, accommodation and food service activities, and information and communication.
This largely reflects structural changes in the economy, such as respective roles of the oil extraction, information and communication technology sub-sectors in the economy; and indeed the services sector’s overall contribution
Accordingly, the GSS now samples for data collections from a target of 835 firms – an increase from 225. Data is collected on 2,639 products, monthly – an increase from 900. Monthly data is obtained from 603 firms.
Tracking PPI
Due to its potential to act as a leading indication of consumer price inflation (CPI), the PPI effectively plays numerous functions in helping investors make better investment decisions. Inflationary input costs are passed on to retailers, and ultimately to consumers by producers. This makes it easier to predict how the price of finished goods will change in the future. The PPI for finished products gives a picture of the anticipated CPI change.
Higher input costs are ultimately passed on to following customers in the supply chain by businesses. The final products that these businesses supply to retail stores will therefore carry greater prices.
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