Inflation projected to fall below 40% by April
Senior Credit Research Analyst at REDD Intelligence, Mark Bohlund, has projected Ghana’s inflation rate could fall below 4,000 bps (40%) by April this year.
According to Bohlund, his base effects analysis indicate that inflation will fall by more than 1,000 bps (10%) by April.
“The inflation rate has declined for two straight months and may fall more sharply to below 40% by April due to base effects, said Bohlund when quizzed about the country’s inflation by Bloomberg.
According to Bloomberg, the cedi, which whipsawed in 2022 over concern about its ballooning debt load and then optimism about a provisional International Monetary Fund bailout, has been relatively steady this year, helping to keep inflation in check.
According to latest data from the Ghana Statistical Service (GSS), inflation rate in February 2023 recorded a marginal decline of 80 basis points, sustaining the reversal in the upward trend recorded in most parts of 2022. This decline was primarily driven by the food group, which recorded a year-on-year inflation rate of 59.1%, a decrease of 190 bps from the previous month.
Year-on-year Inflation for the month of February 2023 slowed down to 52.8%, the Ghana Statistical Service further pointed out.
This was a reduction from the January 2023 estimate of 53.6%.
The fall was the second consecutive time that the rate dropped in 20 months.
Food and non-alcoholic beverages, Transport, and Housing, Water, Electricity, Gas and Other Fuels divisions all saw declines, the Transport division was the only sector that saw an increase in inflation.
Local inflation also recorded a further decline of 100 bps year-on-year, recording 49.0% for the month of February 2023. This is a positive development, but it is still significantly above the government’s target range of 6-10%. Meanwhile, imported inflation stood at 62.3% year-on-year for the month of February, indicating that the inflationary pressures in the economy are not just being driven by domestic factors. Although imported inflation recorded a marginal decline of 20 bps from the previous month, it still remains higher than the headline rate, suggesting that policymakers will need to pay close attention to this issue going forward.
On a month-on-month basis, inflation between January 2023 and February 2023 increased by 20 bps to 1.9%. While food inflation reduced month-on-month by 80 bps, non-food inflation increased month-on-month by 90 bps to record 2.0% and 1.7% respectively. Non-food imports such as Diesel and Petrol recorded month-on-month inflation of 3.0% and 13.3%, respectively. These figures indicate that while inflationary pressures are easing in some areas of the economy, there are still concerns that need to be addressed.
At the regional level, the Western North Region recorded the highest inflation rate of 63.6%, while the Volta Region recorded the lowest inflation rate of 35.4%. These regional variations highlight the need for policymakers to take a nuanced approach to tackling inflationary pressures, as different regions of the country may be experiencing different levels of inflation.
