Ghana’s current high inflation is believed to have been somewhat caused by the printing of a set of GHS100 and GHS200 notes by the Bank of Ghana in November 2019.
A Senior Finance Lecturer at the University of Cape Coast (UCC) Business School, Seyram Kawor, who holds this notion, stated that prices of goods and services saw an upward trend when more money was pumped into the market.
He explained that since more currency chased a limited number of goods, there was a shortage, and with demand exceeding supply, prices increased just as the law of economics prescribes.
“We want to go cash lite society where people will not be using cash. Then, all of sudden, you’ve gone ahead to print new denominations of ₵100 and ₵200. Automatically, certain things that may be bought at ₵95 may go up to ₵100. It is natural for these things to happen.”
“Once currencies are printed, we have prices going up. We have no justification for printing larger denominations. That is the price that we are paying for now,” he said.
According to the Finance Minister, Ken Ofori-Atta, the printing of the notes cost $8.97 million.
In November 2019, inflation stood at 12.2%. After more cedis were printed, inflation fell to 7.8% in January 2020. The rate remained unchanged in the first quarter of 2020.
In April, the rate rose to 10.6%, then to 11.3% in May. The year ended with a rate of 10.4%.
From January to December 2021, inflation hovered between 10.4% and 12.5%. Unlike previous years, 2022 has seen inflation rise consistently, either at an increasing or decreasing rate.
In 2020 and 2021, Ghana battled the COVID-19 pandemic. However, data from the Ghana Statistical Service (GSS) shows that inflation remained relatively stable.
At the beginning of this year, inflation stood at 13.9%. As of September 2022, the inflation rate stood 37.2%.
The country is still battling the virus in 2022 and, according to the government, the ongoing war between Russia and Ukraine is having an adverse impact on the economy.
As a result, fuel prices on the world market have seen a surge.
Due to the many factors that affect a country’s inflation (food, transport, energy), it is uncertain how much the supply of GHS100 and GHS200 notes in the past three years has affected inflation.
Source: The Independent Ghana