Inflation reduced by 0.3% to settle at 16.3% for the 12-month period ended May 2005 from 16.6% recorded in April.

Statistics released by the Ghana Statistical Service last week on the economy indicated that food index which accounts for about half of computable items dropped in May to 16% from 16.7% in April.

Non-food inflation increased to 16.6% from 16.4% in April because of the rise in petroleum products of about 50%.

Analysts say inflation might drop even further with the harvesting season of farmers approaching. They say the reduction in the prices of food stuffs which is a major component in the calculation of the indices would reduce inflation significantly.