Why do prices of goods and services increase in Ghana

The increase in prices of goods and services in Ghana is currently a major concern for many Ghanaians. The cost of basic things like food, housing, education, etc has gone up so high, causing financial strain on families and individuals across the country. If this issue continues, the quality of life for many Ghanaians will be affected.

The average Ghanaian does not need an economics degree to know the economy is going through a very rough patch. They feel it on their commute to work and when shopping for foodstuffs. The Ghana Statistical Service’s figures noted that the continuous increase in food and transport prices across the country has pushed the national year-on-year inflation to over 31%.

While it is easy to point to fuel prices and the depreciation of the Cedi as contributing to the high cost of living in Ghana, there are more factors causing anguish to the pockets of Ghanaians.

Goods and services that has seen a significant rise in Ghana

• Food
• Transportation
• Education
• Housing

Food

Food is one of the goods and services that has seen a significant rise in Ghana. Food Inflation in Ghana averaged 10.82 percent from 2013 until 2022, reaching an all time high of 59.70 percent in December of 2022 and a record low of 5.00 percent in July of 2014. Every sector of food in Ghana has seen a rise. It been rice, maize, fruits, vegetables, meats, fish, etc. Everything food in Ghana is rising every blessed day.

Transportation

Transportation has also seen a significant increase in Ghana. Due to the high cost of fuel and the depreciation of the Ghanaian cedi against major currencies such as dollar and pounds. Public transportatio, taxi, ubers, etc. fares has increased significantly, making it difficult for many Ghanaians to go to work or school.

Education

The cost of tuition fees in both private and public universities has increased significantly in recent years. Even with free SHS in the country, there is an increase of some paid goods such as text books and other learning materials in the secondary sector. This has made it difficult for many families to afford a higher education for their children.

Housing

Renting in Ghana is now a headache to several Ghanaian tenants. Even old buildings that has not been renovated for years still increases in prize every year with land lords and ladies claiming it is because the country is now hard to live in. The cost of rent in major cities such as Accra and Kumasi has increased by as much as 30%, making it difficult for many Ghanaians to afford decent place to live.

Factors contributing to rising prices in Ghana

1. Inflation

Inflation occurs when the general price level of goods and services increases over time. The higher the inflation rate, the higher the cost of goods and services. Inflation has been a persistent problem, and it has made it difficult for consumers to keep up with the rising prices in Ghana.

2. Currency depreciation

The value of the Ghanaian cedi has been declining over the years, and this has led to an increase in the cost of imported goods. Ghana heavily relies on imports, and a weaker currency means that the cost of imported goods will be higher, leading to higher prices.

3. High taxes

The government imposes various taxes on goods and services, and these taxes are passed on to consumers in the form of higher prices. The high taxes also make it difficult for businesses to operate, leading to higher production costs, which are also passed on to consumers.

4. Energy costs

The cost of electricity and fuel has been increasing over the years, and this has led to higher production costs for businesses. The higher production costs are passed on to consumers in the form of higher prices.

5. Supply chain disruptions

The COVID-19 pandemic has led to disruptions in global supply chains, and this has affected the availability of goods and services in Ghana. The reduced supply has led to higher prices, as demand remains high.

6. Market monopolies

Some businesses have a dominant position in the market, and they can control prices. These businesses can increase prices without fear of competition, leading to higher prices for consumers.

What will happen if prices of goods and services keeps increasing

• When prices of goods and services keeps on rising, the value of the Ghana cedis will decrease and in turn will have a negative impact on the country’s economy. If inflation sets in, it will lead to decrease in purchasing power as people will be forced to spend more money on basic necessities because the value of their money have decreased.

• When things are difficult in the country, it makes the people unrest giving them pressure and having a negative impact on their health and well being. And since things are high, they will end up finding it difficult to afford food and healthcare which will lead to the increase in illness and diseases in the country. If that happens, productivity decreases and it affect the country’s economy.

• The rising cost of living can also lead to social unrest. When people are unable to afford basic necessities, they may become frustrated and angry. This can lead to protests and demonstrations, which can disrupt the normal day to day activities in the country.

• When the citizens are unable to afford basic necessities, they may be unable to invest in their businesses or education. This can lead to a decrease in productivity and economic growth, which can have a negative impact on the country as a whole.

Possible solutions to address rising prices in Ghana

1. Produce more locally and import less

Ghana imports good and services more than they export and that is a major reasons goods and services are increasing in prizes each day. If you import more than your export and you have a weak currency, you end up importing goods at a high cost. By increasing local production, the country can reduce imports which will lower prices of goods and services for consumers.

2. Implement price controls or other regulatory measures.

Price control methods are been used by governments in other countries and to make prices of goods and services stable. This could involve setting maximum prices for certain goods, regulating price increases, or imposing taxes on certain products that are driving up prices. While these measures can be controversial and have potential downsides, they may be worth considering in extreme cases.

3. Promote competition and consumer choice

In most cases, prices of goods and services increases when there is lack or no competition in the market. If competitions are created, it will force sellers to reduce their prices in order to attract customers.

4. Invest in infrastructure and technology

Investing in infrastructure and technology can also help reduces prices of goods and services. Good and easy access to roads can make it easier for delivery but bad and poor roads will also make delivery difficult and with that, it ends up increasing prices. Same goes to technology setups.

5. Address underlying economic and political issues

Tackling corruption, promoting economic growth and stability, implementation of good policies, etc can also help in stabilizing goods and services in Ghana. This method may be quite difficult since eradicating corruption in Ghana is a tough task but if done, then there is a possibility this method can be put to use.

Conclusion

Rising prices in Ghana is a critical issue that requires urgent attention. The current situation is affecting the livelihoods of many Ghanaians, especially the poor and low income earners. Failure to address this issue will lead to a more significant crisis that will negatively impact the economy and social stability of the country. It is important for all dignitaries in the country has to come together and take action towards finding positive solutions to this problem.