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Finance Minister hails achievement of reduction in inflation rate

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The inflation rate fell for the 12th consecutive month in June to 9.52 per cent from 10.68 per cent in May, the Government Statistician said on Wednesday.

The rate, which is the lowest since April 2007, has been helped mainly by declining food prices, Dr Grace Bediako said at a briefing in Accra.

The food and non-alcoholic beverages group has been recording single digit inflation rate since January 2010, falling from 9.08 per cent to 4.69 per cent in May 2010 increased to 6.13 per cent in June 2010.

The non-food inflation rate, on the other hand, though declining had been recording double digit inflation rates.

Inflation rates in the regions ranged from 0.98 per cent in Eastern Region to 17.22 per cent in Brong Ahafo Region. Eastern, Greater Accra, Ashanti and Northern Regions recorded inflation rates below the national rate of 9.52 per cent.

Dr Bediako said increased wages would not necessarily push up prices in the short-term, falling short of forecasting another decline in the rate in July.

“The trend we have seen is the decline and our hope is that whatever factors are responsible are maintained. However, the statistical service is not in any strong position to say it would come down,” she said.

In a statement, Finance Minister, Dr Kwabena Duffuor, has described the single digit inflation rate as refreshing news and said the stabilisation programme was on course and all targets set were within reach in just about 18 months of President Mills’ administration.

“The success of our counter inflation policy has been exceptional and has surpassed expectation. This is a major achievement that brings widespread economic benefits because inflation distorts resource allocation in the economy, hurts the poorest members of the society, creates uncertainty and arbitrarily redistributes income and wealth”.

“Again it undermines macroeconomic stability and makes sustained rapid growth impossible to achieve. As a result, getting to an inflation rate of 9.52 per cent is an impressive turn around in such a short time,” Dr Duffuor said.

He said the chronic fiscal imbalances of 2008 resulted in persistent inflation over the last two years therefore, bringing the fiscal situation under control had been essential to the success of the counter inflationary policy and the macroeconomic stability that Ghanaians were currently enjoying.

“Government is therefore committed to implementing policies that would ensure a lowering of domestic interest rate and reduction in exchange rate volatility so as to enhance business confidence,” the Finance Minister added.

Dr Duffuor said government’s objectives of gradually moving to an overall fiscal balance would also help to strengthen the macroeconomic policy framework and free resources for essential infrastructure and other programmes.

“It is therefore important that we focus on the target we have set for ourselves in the 2010 Growth and Stability Budget,” Dr Duffuor said.

Source: GNA

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