How the cost of living is affecting the people of Ghana today
The steady up-rise in the cost of living is currently a heated issue for people worldwide. However, this crisis is becoming unbearable for most Ghanaian’s as the majority struggle to cope with the soaring prices.
Inflation, which is the term used to describe rising prices, hit an all-time high in the summer, of 2022.
According to B&FT Online: “Ghana’s annual inflation rate accelerated for the 13th consecutive month to 29.8% in June of 2022 from 27.6% in May, – and this is the highest since 2004.”
This blog will explain why there is such inflation in Ghana and how it has gotten to this critical point.
One main noticeable issue that has contributed to the cost of living crisis in Ghana is the exchange rate. Ghana mainly relies on imported goods and does not rely on the country’s manufacturing. With the lack of commodities being exported from Ghana, the country’s exchange rate will not increase in profit and the Cedi’s (Ghana’s unit of currency) value will continue to decrease.
The decrease in the value of the Cedi is an issue that many Ghanaians are aware of. The continuous fall in the Cedi’s value over the last three years has depreciated Ghanaians’ confidence in investing with this currency. Due to the widespread lack of confidence within the Cedi, a domino effect has therefore been created. Instead, people are more likely to dump the Cedi for other alternative forms of currency such as the US Dollar.
To learn more about the depreciation of the Cedi click here.
The next concerning problem is the transportation of Ghana’s goods, i.e. ‘Freight’. Freight is the physical process of transporting commodities bulk by bulk. As stated before, Ghana is a country that heavily relies on imported goods so freight has great importance to the country as a whole. However, since the start of the pandemic, the cost of freight has skyrocketed globally.
According to the Ghana Institute of Freight Forwarders, the freight charge for a 20-foot container from China has increased from an average of USD1500 to USD3500, a 133% increase since 2019.
For Ghana, a country that depends on imported goods, attempting to afford this rise in cost will be a troublesome challenge.
The Russian war in Ukraine has caused global economic devastation, and Ghana is no exception.
Many countries have used economic sanctions as a way of financially disabling Russia in their pursuit of invasion. Economic sanctions are measures taken by a particular nation, or group of nations, that financially pressure another nation to act accordingly. As many countries rely on Russia for their oil, gas, and various other imported goods, these sanctions will bring about direct and indirect consequences on global economies including Ghana.
Ghana is mainly recognized for its importation of goods such as oils, mineral fuels, and more. Due to the economic sanctions Russia is facing, these importations will be poorly affected, as Ghana will no longer be able to buy and import such commodities from Russia.
To add to the shortage of goods, imports and exports from and to Ukraine will also not be possible. Ghana’s main exports to Ukraine, slag, ash, ores, and cocoa, will have to halt as the invasion continues.
The Russian invasion of Ukraine has caused dramatic financial inflation in Ghana. In consequence, government expenditure will be forced to increase. This type of government expenditure is certainly unexpected and is not something that Ghana has budgeted before. This means that government funds allocated to other sectors will have to be diverted to make up for this expenditure.
To learn more information click here.
The ongoing rise in transportation costs in Ghana is also a major issue for the people of Ghana. The cost of transport services in Ghana suffered a 15% increase in February 2022. This makes it harder for many Ghanaians to afford transport to work and make a living for their family.
As a result of the inflation, many people across Ghana are losing their jobs and will no longer be able to afford food and everyday goods for their families. Without food, families will soon face poverty. With poverty brings starvation and death.
The cost of living in Ghana is an issue that cannot be denied or ignored.
By Katherine Stephenson