Prices Will Not Drop Overnight – Economist

Senior Lecturer in Finance and Economics at the University of Ghana Business School, Dr. Jabir Mohammed, has cautioned consumers against expecting immediate price reductions despite recent interventions aimed at stabilising the economy.

His comment comes as government intervention on fuel prices is expected to ease pressure on transport, logistics and production costs.

Speaking on Business Breakfast on ZED 101.9FM, Dr. Mohammed emphasised that the primary benefit of current policy measures is price stability rather than rapid declines in the cost of goods and services.

“The benefit to consumers is that prices are going to be stable. That’s all. You shouldn’t expect a magical overnight outcome,” he stated.

He referenced earlier discussions on transport pricing, recalling his advice to transport operators not to rush into fare adjustments during periods of uncertainty in fuel prices. According to him, operators who exercised restraint were initially protected from abrupt market fluctuations.

However, he noted that subsequent increases in fuel prices forced transport operators to eventually adjust fares, prompting government intervention through subsidies.

“That is the dynamic that played out. When they waited and fuel prices rose again, they had no choice but to increase fares, and then government stepped in,” he explained.

Dr. Mohammed highlighted the strong link between transport costs, energy prices, and the general price level in the economy. He explained that changes in transport fares often have a ripple effect on food prices and other commodities, as distribution costs are a major component of pricing.

“Most goods rely on transport and energy costs to determine their prices. So when those factors remain stable, prices of goods will also tend to stabilise,” he said.

He stressed that in the absence of sustained fluctuations in fuel and transport costs, consumers should expect relative price stability rather than sharp increases or decreases in the near term.

Dr. Jabir Mohammed also called for stronger competition and better regulation in Ghana’s transport sector, arguing that limited viable alternatives continue to influence fare levels.

He noted that although the transport sector appears open to entry, with individuals able to purchase vehicles and join the business, practical competition remains constrained in many areas.

According to him, this situation reduces the pressure on operators to lower prices, as consumers often have limited alternatives, particularly on busy routes.

He noted that strengthening competition and improving system regulation would be key to achieving more stable and fair transport pricing for consumers.