Where Does the Axe Fall? Inflation Dynamics and Poverty Rates: Regional and Sectoral Evidence for Ghana

The possibility of an inflation-induced poverty-trap due to the welfare-decreasing effects of inflation and the advantages of geographic targeting in poverty programs are well-documented. Using fractional integration methods, and data from Ghana, we analyze regional and sectoral inflation dynamics vis-à-vis regional poverty rates to determine where the adverse impacts of inflation persistence would, most likely, hit hardest and policy should target. In particular, we conclude that the poor in three regions, and patrons of five sectors require the most attention, particularly since three of the five sectors are basic necessities.