Mid-year inflation rate surpasses what was predicted for the entire year

Sep 06, 2022 News

Kaieteur News – The Bank of Guyana (BoG) in its report on the performance of the country in the first three months of 2022 had estimated that by year end, inflation (the rate of increase in prices over a given period of time) would reach 4.1 percent.

In the first few months of the year, inflation of 1.7% had already occurred. However, now, the Ministry of Finance in its Mid-Year Report has revised this estimate up. It is now expected that full-year inflation will be 5.8%. This represents an increase in expected inflation of 41% from the previous report. In fact, this 5.8% full year inflation rate is even higher than last year’s inflation rate of 5.7%.

According to the document, the increase is “underpinned by high food and energy prices, with the former increasing by 8.1 percent and contributing 3.6 percentage points to the inflation rate.” Further, it was explained that the main drivers in the food category that pushed up the figure were meat, fish and eggs, vegetables and vegetable products as well as cereals and cereal products. With regard to the higher energy cost, the Finance Ministry noted that major contributors were operation and personal transport which rose by 27.1 percent, in addition to fuel and power increasing by nine percent.

Government in its report pointed out that while a 4.9 percent increase in CPI has been recorded at the end of June, this is lower than the 5.6 percent increase that was documented at the end of half-year 2021. “The 12-month rate across the first 6 months of 2022 averaged 6.2 percent, consistent with the record high inflation seen globally,” the Mid-Year Report explained. It went on to point out that the United States for example recorded a 12-month inflation rate of 9.1 percent in June 2022, the highest rate since 1981.

Nevertheless, the revised end-2022 12-month inflation rate is now forecasted to be 5.8 percent in Guyana. Government said it responded with a series of measures to ease the burden of growing commodity prices on citizens when it announced the reduction of excise tax on petroleum from 20 percent to 10 percent which was further reduced from 10 percent to zero. Additionally, the administration boasted that in this year’s Budget it “removed VAT on cement to lower the cost of construction, and announced the reduction of the final tax applied on miners’ incomes from 3.5 percent to 2.5 percent, and the removal of the 10 percent tributors tax.”

Additionally, “as part of the $5 billion allocated in Budget 2022 for measures to ease the cost of living, Government utilised $1 billion for the purchase and distribution of fertiliser to farmers across the country and $800 million for cash grants to households in riverain and hinterland communities,” the Ministry said in its report. It was keen to note that the administration is committed to the continued monitoring of cost of living throughout the rest of the year and moreover responding “proactively with actions to reduce the burden on all Guyanese”.

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