Abstract:
This study is concerned with the evaluation of the price levels of food
items in various markets across Ghana. The objective was to determine the
main dimensions along which to identify specific markets in which items are
high-priced and those that are low-priced. To this end, data on prices in 2008
of fifteen food items in 100 selected markets from all the regions of the
country were obtained from the Statistical, Research and Information
Directorate of the Ministry of Food and Agriculture. The data thus obtained
were multivariate in structure since prices of 15 food items were recorded
from each of 100 markets. Principal Component Analysis, which is a
procedure for data reduction and summarization, is considered appropriate for
analyzing this high dimensional data set. Initial exploration of the data, using
zero-order and partial correlation analysis and eigen-analysis among others
further informed the choice of the technique.
It was found that there are two important dimensions along which the
levels of prices can be determined. These are the weighted sum of all the food
items and the weighted sum of only food items that are considered as the main
constituent of a typical local diet. A cluster analysis of the first component
scores revealed that only a single market, Tepa in the Ashanti Region, was
generally the lowest-priced market in the country. However, markets that are
predominantly located in the Northern, Upper East and Upper West Regions
are generally high-priced specifically the Bongo market in the Upper East
region. There are, however, not much extreme-priced markets on the second
component. The study shows that it will be economically beneficial to be
mindful of the location and the size of the market from which one intends to
make purchases of certain categories of food items.
