Falling inflation doesn’t mean lower prices – TUC official

Dr Kwabena Nyarko Otoo, Deputy General Secretary of the Trades Union Congress (TUC), has cautioned against interpreting Ghana's declining inflation rate as meaning that prices of goods and services are decreasing. On Joy FM's Super Morning Show, Dr Otoo clarified that while inflation has significantly decreased over the past 1.5 years, consumers are still paying more for essential goods and services compared to before.

He emphasized that falling inflation only signifies a slowdown in the rate of price increases, rather than a decrease in actual prices. Dr Otoo stressed that the distinction is crucial as many Ghanaians might expect lower inflation to directly lead to cheaper goods and services. According to him, the rate of price growth has slowed, but the original price levels remain unchanged.

He used the housing market as an example, noting that the cost of renting a two-bedroom property has not returned to pre-inflation increases and is still on the rise, albeit at a slower pace. This situation poses challenges for households as incomes have not necessarily kept up with the cost of living. Despite the improvement in inflation, Dr Otoo pointed out that the gap between income growth and price levels continues to burden household budgets.

While the current scenario offers some relief as prices are no longer increasing as rapidly, it is important to distinguish it from an actual reduction in the prices consumers pay. Dr Otoo's remarks underscore the difference between falling inflation and falling prices. While lower inflation indicates a slowing pace of price increases, it does not automatically reverse the price increases that have already taken place.

He urged stakeholders to consider actual consumer prices, beyond the headline inflation figure, when evaluating the country's cost-of-living situation.