The mining and quarrying sub-sector’s producer price inflation increased by 14.3 percent over the March 2020 rate of 23.7 percent, to reach 38.0 percent in April 2020.
The price of gold on the international market shot up from about US$ 1,639 per ounce on the April 01, 2020 to US$ 1,760 per ounce as at April 15, before then declining slightly to US$ 1,688 per ounce by the end of April. However, the commodity is currently trading at US$ 1,753 per ounce as at May 20, 2020.
The Government Statistician Professor Samuel Kobina Annim noted, say; “In the context of the producer inflation, the increase of 0.6 percent on year on year basis and 3.6 percent on a month on month basis, is mainly attributed to changes in the price of gold. One has to be circumspect in attributing the changes in PPI to domestic COVID-19 related issues.”
Aside the effects of the novel coronavirus, which has influenced the sentiments of investors, the World Gold Council has stated that other principal factors driving the price of gold include the current trade tensions between the US and China, which has encouraged investors to return to gold as a traditional hedge in times of turmoil
Further to this, the persistently low interest rates on the major international financial markets have reduced the opportunity cost of holding gold and highlighted its attributes as a source of genuine, long-term returns, particularly when compared to historically high levels of global negative-yielding debt.
The Council also indicates that a surge in interest in gold among central banks across the world, commonly used in foreign reserves for safety and diversification, has encouraged other investors to consider gold’s positive investment attributes.
Producer Inflation Trends
In April 2019, the producer price inflation rate for all industry was 7.1 percent. The rate declined to 6.7 percent in May 2019. Thereafter, the rate increased consistently to record 10.2 percent in August 2019 but declined to 8.9 percent in October 2019. The rate then increased again continuously to record 14.5 percent in January 2020 but declined to record 6.8 percent in March 2020. The rate increased again to record 7.4 percent in April 2020.
The producer inflation for Manufacturing which constitutes more than two-thirds of the total industry decreased by 1.6 percentage points to record 0.5 percent.
The utility sub-sector recorded an inflation rate of 12.1 percent for April 2020 indicating a decrease of 0.1 percentage point from the March 2020 rate of 12.2 percent. Read Full Story