Ghana’s Inflation Falls to about 3.8% in January!? Great News! Now my Valentine’s bill will be cheaper, right? OPE? RIGHT?
Hello there! It is indeed exciting news, but not in the way you think. Before you step out on Val’s day, here’s what you need to know.
What is inflation?
Okay, so when you hear inflation being mentioned, we are just looking at how fast or slow the price of the things we buy changes. For example, how much was toblerone’s two years ago? What about last year? Then how much is it this year?
You can do this rough calculation in your head. Once you’re done, you can likely predict how much it will cost next year. This is basically how inflation is calculated and also what it is useful for. It’s like a speedometer for the economy. When we say inflation is 3.8%, we mean prices are 3.8% higher than they were a year ago.
What it means for your current Val’s spending
Well, there is good news and bad news. Let’s start with the bad news. When inflation causes prices to go up, it is permanent. Unless there is deflation. That is a conversation for another day. What we need to understand now is that when prices go up because of inflation, they are stuck.
Think about it: Since your younger years, have prices ever gone down? No? That is what inflation does to prices. So that box of chocolate that jumped from GH₵80 to GH₵120 during high inflation? It’s staying at GH₵120 charley. Lower inflation is not an undo button, so I guess you still have to plan accordingly.
Now for the good news!
What it means for your future, Val’s spending
If this trend of low inflation continues, it means your next Vals day will become more affordable. That also depends on your income too. If your income stays the same, good news, I guess? If it increases relative to inflation, more good news! Say you get a 10% salary raise under 3.8% inflation, this means more money for your pocket. Stable, low inflation today means more predictable, affordable Valentine’s Days tomorrow. Progress happens gradually, and this is a step in the right direction.
P.S you can read more on inflation here
Thank you so much OPE.
BRAVO.
My question is, can inflation fall to zero and can we have deflation?
Yes! It is possible for it to fall below zero but that will mean bad news for everyone!