Prices of goods and services are expected to go up in the coming days and weeks, following the 13% upward adjustment in transport fares.
This probably will shoot up inflation though the margin of increase might not be too wide.
Inflation is an important indicator that banks use in pricing their loans and therefore any significant increase in inflation could push the financial intermediaries to increase their lending rates.
Fuel and transport also have significant repercussion on cost of living and cost of doing business as any drastic adjustment could trigger some high cost of living and cost of doing business.
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Consumers will then have to adjust their lifestyle or better still exhibit prudence in spending in order to keep their expenditure within their income levels or earnings.
Also, businesses will have to review their budgets to contain any rising expenditure in order to avert any negative impact on their income. An example is to cut unnecessary expenditure to reduce cost or better still spend on projects that will yield returns quickly.
Again, Transport costs also have significant impacts on the structure of economic activities as well as on international trade. There is evidence that that raising transport cost by 13% can reduce trade volumes by about 26%.
Furthermore, social impacts of transport might positively or negatively influence the preferences, well‐being, behaviour or perception of individuals, groups, social categories and society in general.
Transport fares go up from Saturday June 5, 2020
The 13% increase in transport fares will affect all forms of transport including Inter-city (trotro), Intercity (long distance) and shared taxis.
According to the the Ghana Private Roads Transport Union, the increase is to accommodate rising fuel prices announced in May 2021, after long negotiations with stakeholders.
“Upon consultations, government has assured us that it will continue with efforts to prevent a steep rise in input cost. Government had also assured us by a letter from the Ministry of Finance that the suspension of the quarterly income tax paid by owners of trotros and taxis will be extended to cover intercity commuter vehicles to reduce the operational cost. We, therefore, encourage government to keep to its commitment in this regard,” it said.
Inflation returned to single digit as it remarkably fell to 8.5% in April 2021, from the 10.5% recorded in March 2021, figures from the Ghana Statistical Service revealed.
It was the first single digit rate recorded in the year, following the ravaging effects of covid-19 on the economy.
This meant increases in price of goods and services slowdown in April 2021, comparatively to March this year. However, it was higher than the rate recorded during the same period last year.
Month-on-month inflation between March and April 2021 was, however, 1.5%.
According to the figures, food inflation rate stood at 6.5%, lower than the 10.8% recorded in March 2021. Non-food inflation rate, however, went up to 10.2% in April 2021, from 10.0% recorded in March 2021.