Both government and the Bank of Ghana have clearly missed their inflation targets for 2015, latest figures released by the Ghana Statistical Service have shown.

While government projected an end-year revised inflation target from 11.5 percent to 13.7 percent for the year, the Bank of Ghana was predicting an 8 percent plus or minus 2 but later revised to 13.5 percent.

Latest figures announced by the Ghana Statistical Service show the year-on-year inflation rate for the month of December 2015 surged to 17.7 percent, compared with the 17.6 percent recorded in November 2015 -- representing the highest rate since July 2015.

The 0.1 percentage point increase compared to the previous rate was attributed to increases in the non-food inflation rate during the month under review, which was 23.3 percent compared with the 23.2 percent record in November 2015. This figure was three times higher than the food inflation rate, which rose to 8.0 percent from 7.9 percent recorded for November 2015.

The main ‘price drivers’ for the non-food inflation rate were recreation and culture, which was 26.9%; education had 26.8%, transport recorded 27.0% while clothing and footwear was 24.1%, and furnishings, household equipment and routine maintenance had 25.8%. Meanwhile, housing, water, electricity, gas and other fuels were 24.3%, and the main ‘price drivers’ for the food inflation rate were vegetables, recording 13.3%, and mineral water, soft drinks, fruit and vegetable juices which recorded 10.6%.

The year-on-year inflation rate for imported items was 18.3 percent for December 2015, representing 0.8 percentage points higher than that of locally produced items, which recorded 17.5 percent.

Government Statistician Dr. Philomena Nyarko, announcing the figure at a media conference, attributed the increase to recent hikes in utility prices and projected a continuous rise in inflation rate for the first quarter of 2016.

Government in November 2015 announced a 56.9 percent utility price increment, which took effect in December 2015. This development has fuelled high lending rates within the consuming market.

Thus, according to some economic analysts they are of the view that on average the economy has faced massive challenges with lots of external shocks; and some have predicted a further surge in inflation this year, based on government’s fiscal and monetary policy framework, expectations for key commodity prices, and instability of the cedi against major currencies like the dollar.

The country’s economy, which depends largely on the export of commodities like oil, gold and cocoa, was hard hit by the persistent fall in commodity prices on the global market last year.

The crude oil price is recording a continuous price fall in the world market, to about US$32 per barrel; which could mean government runs a risk of losing close to US$200million (approximately GH¢800million) in benchmark petroleum revenues after using US$53.02 as price per barrel for its benchmark price of this year.

This year, government estimates it will receive more than US$500million or approximately GH¢2billion from petroleum revenues.

Moreover, the International Monetary Fund (IMF) has raised key concerns on the country’s economic trends, saying “The economic outlook remains difficult with risks tilted to the downside”.

The IMF Board warned government to “resolutely continue its fiscal consolidation efforts. With government debt continuing to increase and financing remaining a challenge, the 2016 budget rightly aims at a stronger consolidation than originally envisaged.

“In this regard, it is essential that government sticks firmly to its policy of strict expenditure controls, by maintaining the wage bill within budget limits while controlling discretionary spending and protecting priority spending,” the Board said.

The IMF again suggested that to help bring inflation down toward its medium-term target, the Bank of Ghana (BoG) should stand ready to further tighten monetary policy if inflationary pressures do not recede as expected.

The preparation of an amended Bank of Ghana Act and BoG’s commitment to gradually deepen the foreign exchange market will help make the inflation-targetting framework more effective.

“Financial sector stability will need to be monitored closely in a context of deteriorating asset quality. The BoG should take immediate steps to increase resilience and address weaknesses in asset classification. Prompt implementation of the new banking laws currently under review by Parliament is also essential to safeguard financial sector stability,” the IMF said.

On the regional inflationary rate, three regions -- namely Ashanti, Greater Accra and Upper West Regions -- recorded inflation rates higher than the national average of 17.7%.

The Ashanti Region recorded the highest year-on-year inflation rate of 19.2% while the Upper East Region recorded the lowest inflation rate of 13.7 percent.