Weak Cedi Drives Up Cost of Living – Analyst

Economic Analyst Emmanuel Boateng has warned that continued pressure on the Ghana cedi will increasing the cost of living and push up operational expenses for businesses across several sectors of the economy.

Speaking on Business Breakfast on ZED 101.9FM, Mr. Boateng explained that Ghana’s heavy reliance on imported refined petroleum products means any depreciation of the cedi quickly translates into higher fuel prices.

“Because Ghana imports refined petroleum products, a weaker cedi immediately increases the local currency cost of fuel imports, and that will eventually feed into higher fuel prices at the pump,” he stated.

According to him, rising fuel prices have a ripple effect across the economy, affecting transportation, food prices and the general cost of goods and services.

“Everybody knows what happens when fuel prices go up in Ghana. It impacts local prices. It impacts the price of transport. It impacts the price of whatever you can think of,” he said.

Mr. Boateng noted that manufacturers who depend on imported raw materials are also under pressure as the weakening cedi increases production costs.

“Manufacturing firms, especially those that rely on imported raw materials, face rising costs. If you are importing machinery, chemicals, packaging materials or spare parts, your operational expenses will go up significantly,” he explained.

He added that businesses often transfer these increased costs to consumers through higher prices of goods and services.

The economic analyst further identified retail businesses and importers as among the most vulnerable groups affected by exchange rate instability.

“Traders who import electronics, clothing, food products and household items will require more cedis to obtain the same amount of dollars, and that could lead to higher prices in the shops and markets across the country,” he said.

Mr. Boateng stressed that ordinary households ultimately bear the greatest burden as inflationary pressures continue to rise.

“Once fuel and import costs go up, transportation charges, food prices and utility-related costs all increase,” he noted.

He warned that sustained exchange rate pressures could continue to erode the purchasing power of consumers and worsen living conditions for many Ghanaian households.

“The exchange rate pressure eventually affects the overall cost of living for ordinary consumers and ordinary Ghanaians alike,” he added.