Economists Urged to Educate Ghanaians on Inflation and Prices
Nat’l Tymes News Desk
THE DEPUTY Director-General of the Securities and Exchange Commission (SEC), Mensah Thompson, has called on Ghanaian economists to take the lead in educating the public about inflation and how it affects the prices of goods and services, especially food.
According to him, many Ghanaians wrongly believe that when inflation goes down, prices of goods must also fall. He stressed that this misunderstanding is causing confusion and unrealistic expectations among the public.
Mr. Thompson made these remarks in a post on his Facebook page, where he challenged economists to step forward and explain inflation in simple terms to help people better understand how the economy works.
Inflation Falling Does Not Mean Prices Will Drop
Mr. Thompson explained that lower inflation does not mean cheaper goods. Instead, it means the rate at which prices increase has slowed down. “When inflation is low, prices may still go up, but they increase more slowly than before,” he said.
For example, if the price of an item used to rise every two weeks, lower inflation means it may now take months before the price changes again. However, the price does not automatically reduce.
Inflation Is Different from Deflation
He further clarified that inflation must not be confused with deflation.
Inflation means prices are increasing.
Lower inflation means prices are increasing more slowly.
Deflation means prices are actually falling.
He emphasized that only deflation leads to a general decrease in prices, not declining inflation. Ghana’s 2022 Experience Was Hyperinflation
Mr. Thompson recalled that in 2022, Ghana did not just experience inflation but hyperinflation, which is an extreme and rapid increase in prices.
He explained that hyperinflation occurs when prices rise uncontrollably, often by more than 50 percent within a short period.
Why Prices Don’t Go Back Down Automatically
Using a simple example, he said if kenkey sold for GH¢5 when inflation was over 50 percent, it does not mean the price will drop to GH¢3 just because inflation has reduced to about 3.8 percent. Instead, the GH¢5 price may remain the same for some time, and any future increase will happen more slowly.
Inflation Is Not Always Bad
Mr. Thompson noted that inflation, like borrowing, is not entirely bad for an economy. It only becomes a serious problem when it is poorly managed and goes out of control. He stressed the need for responsible public discussion, saying political differences should be set aside when it comes to educating citizens.
“As leaders and opinion shapers, we have a responsibility to guide public understanding so we can all work towards shared prosperity, no matter who is in power,” he stated.
Key Takeaway for Ghanaians
Mr. Thompson ended with a strong reminder to the public: Declining inflation does NOT mean a decrease in prices. It only means prices are rising more slowly.
Source: Nationaltymes.com
