Energy economist Aephaniel Owusu-Agyemang has cautioned that rising global crude oil prices could sharply increase fuel price inflation in Ghana, warning that broad government subsidies may worsen economic pressures instead of easing them.
Speaking on the impact of Brent crude climbing to about $105 per barrel, Owusu-Agyemang said Ghana’s heavy dependence on imported fuel leaves the economy vulnerable to global market shocks.
“Well, obviously, this feeds directly into our inflation rates whenever prices of fuel increase on the global market,” he explained. According to him, fuel remains central to almost every sector of Ghana’s economy, making price increases difficult to contain.
Rising Fuel Costs and Inflation Risks
The economist noted that transport fares are likely to rise first, followed by increases in production and food distribution costs across the country.
“And so it is directly going to feed into transport first, which is going to increase production costs,” he said, adding that the transportation of food items and other goods would also become more expensive.
He stressed that Ghana’s reliance on imported petroleum products continues to fuel imported inflation, arguing that long-term reforms are needed to reduce the country’s dependence on fuel imports.
“If the government is going to put in strategic policies to ensure that we reduce the amount of fuel being imported into the country, then we are also going to reduce imported inflation.” - Aephaniel Owusu-Agyemang
Call for Targeted Economic Support
Commenting on concerns raised by Fitch about renewed inflationary pressures from oil prices, Owusu-Agyemang advised policymakers to avoid blanket support measures.
“Governments shouldn’t just go ahead to cushion everybody in the country. It should be targeted,” he said.
He suggested that sectors heavily reliant on diesel, particularly manufacturing and production, should receive focused support while the Bank of Ghana maintains strict monetary market vigilance to manage inflationary pressures.
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