Inflation continues to be a canker the world over, but is more pronounced in The Least Developed Countries like Ghana. Having identified petroleum products as a key inflation driver in Ghana, and petroleum taxes in a deregulated petroleum regime as a potentially significant driver of inflation in the wake of a hyperinflation period, this study was necessitated.
This study uses the Chow Test and Gregory Hanson Structural Cointegration Test to find the significance of petroleum pricing regimes on Inflation. It also adopts the ARDL approach in analyzing the role of petroleum prices in general price levels. It goes further by using a Test for Proportions to find the significance of petroleum taxes in petroleum prices, having determined the significance of petroleum prices in inflation.
The findings inform policymakers to pursue petroleum deregulation but find the right balance between revenue generation via inelastic products like petroleum products and inflation control through the exaction of the right and sufficient taxes.
This study confirms existing knowledge of the relationship between inflation and petroleum products, and the insignificance of petroleum deregulation policy on inflation. It goes further to add new knowledge of the significance of petroleum taxes as a proportion of petroleum prices and inflation
