AfDB revises Ghana’s end-2024 inflation forecast by 350bps to 20.9%
The African Development Bank (AfDB) has revised its inflation forecast for Ghana, projecting a rate of 20.9% by the end of 2024, a notable increase from its earlier estimate of 17.4%.
This updated outlook positions Ghana’s inflation significantly above the Bank of Ghana’s target band of 8% ± 2%, highlighting persistent economic challenges.
The AfDB identifies several key factors contributing to this elevated inflation outlook. These include the fiscal consolidation efforts under the Post-Covid Programme for Economic Growth, ongoing repercussions from Russia’s invasion of Ukraine, constrained access to finance and foreign exchange, and broader global macroeconomic shocks.
However, the bank also notes that judicious macroeconomic management could mitigate some of these risks. Looking further ahead, the Consumer Price Index (CPI) is expected to narrow to 11.1% in 2025, suggesting potential stabilization.
In a broader context of the Africa region, average consumer price inflation across Africa surged to 17% in 2023 from 14% in 2022.
East Africa registered the highest inflation rate at 26.5%, with Sudan experiencing a hyperinflationary rate of 245.3%. West Africa followed with a regional inflation rate of 20.3%, driven by significant increases in Ghana and Sierra Leone.
The AfDB report underscores that the rising inflation across the continent has eroded socioeconomic gains achieved prior to the COVID-19 pandemic.
The inflationary pressures are attributed to a combination of factors: drought-induced local food price hikes, liquidity overhangs from pandemic-related fiscal and monetary stimulus measures, and the depreciation of local currencies against a robust US dollar buoyed by high interest rates in the United States.
This has resulted in a mixed inflationary landscape across different African regions, reflecting varying local and global economic dynamics.
