El Niño could drive up food prices and inflation – Government Statistician

Government Statistician Dr Alhassan Iddrisu has cautioned that Ghana may face rising inflation due to an impending severe El Niño event. This climate pattern, characterized by elevated sea surface temperatures and altered atmospheric conditions across the tropical Pacific Ocean, could disrupt agricultural production, electricity generation, and global supply chains.

The event could push up food prices, increase business expenses, and exacerbate household financial challenges, particularly if weather changes negatively impact agricultural output and water resources. Dr Iddrisu urged policymakers to incorporate weather forecasts into economic planning and take proactive steps to protect the economy from potential disruptions.

He emphasized that early action was crucial, stating that policymakers should consider policy interventions based on predictions to mitigate their impact. A significant concern is the potential effect of El Niño on agricultural production, especially if reduced rainfall during the farming season affects crop yields and food supply, leading to higher prices for consumers.

The climate phenomenon's impact also extends to Ghana's electricity generation capacity, with prolonged dry conditions potentially reducing hydropower output from reservoirs like the Akosombo Dam. This could lead to difficulties for businesses reliant on a steady electricity supply, causing an increase in operating costs that might eventually affect the prices of goods and services.

The Consumer Price Index (CPI), which measures electricity and numerous other goods, is also affected by developments in the power sector. Additionally, Ghana could face El Niño's impact through disruptions in international markets, where adverse weather conditions in countries supplying food and commodities could increase import costs and lead to imported inflation.

The cocoa industry, in particular, is vulnerable to the anticipated weather conditions due to the crucial role of rainfall and temperature in cocoa cultivation. A decline in cocoa production could affect prices, with implications for farmers and the wider cocoa industry. Dr Iddrisu emphasized that the Ghana Meteorological Agency's forecasts should guide economic analysis and policy planning, stressing that early preparation could help limit the potential impact on households and businesses.

He urged policymakers to integrate meteorological forecasts into their decisions to anticipate and address possible disruptions before they translate into significant economic difficulties.