Inflation rate to start declining in 2022; to fall to 6.8% in 2023
Headline inflation for Ghana according to the World Bank is expected to rise marginally from the current 9.7 percent to peak at 9.8 percent by the end of 2021.
Going into the year 2022, the Bretton Wood institution asserts that inflation will ease with headline inflation declining and ultimately reaching 6.8 percent in 2023.
The World Bank in its latest Africa Pulse report asserts the country’s headline inflation for this year and the next two years will remain in line with the Bank of Ghana’s (BoG) medium target inflation band of 8 percent +/-2.
Touching on the recent rise in the country’s inflation rate, the Bank notes that the recent surge in the country’s inflation rate to 9.7 percent is due to a weakening of the cedi alongside increments in food prices.
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“In Ghana, weak domestic currency combined with a rise in food prices pushed headline inflation from 9% year-on-year in July to 9.7% in August 2021, slightly closer to the upper bound of the official target band of 6 to 10%. It is estimated to remain close to the upper bound at 9.8% in 2021 and gradually decrease to 6.8% in 2023,” said the World Bank.
“In the West and Central Africa sub-region, inflation in Nigeria remained high at 17.4 percent year-on-year in July 2021, although it has been decelerating slightly for the past four consecutive months. The average inflation for this year is projected at 16.5%, way above the official target band of 6 to 9%”, it added.
According to the Africa Pulse Report, inflation rates have remained relatively under control across many countries in Africa.
For instance, 35 out of 47 countries had single-digit rates of consumer price inflation last year, and the number of countries is estimated to increase to 38 in 2021.
At the same time, the report stated that the expectation of low-interest rates for a longer period in advanced economies is enabling African central banks to keep an accommodative monetary policy.
