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Abstract
Producer Price Indices are a key of economic indicator in most countries and price instability introduces uncertainty into economic analysis and decision making. This paper empirically models the monthly producer price inflation rates from the year 2009 to 2013 using ARIMA model and the data was obtained from the website of Ghana Statistical Service. From the results, it is revealed that ARIMA(1,1,1) is appropriate for modeling the producer price inflation rates of Ghana with a maximum log likelihood value of -163.34, and least AIC value of 332.68, AICc value of 333.11, BIC value of 338.91 and MAE value of 2.455111. An ARCH LM test and Ljung-Box test on the residuals of the model revealed that the residuals are free from heteroscedasticity and serial correlation respectively. Hence, it is adequate for forecasting the producer price inflation rates of Ghana.
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