AfDB predicts 17% average CPI for Ghana in 2024
In its latest Africa Macroeconomic Performance and Outlook 2024 forecast, the African Development Bank (AfDB) predicts Ghana’s inflation to soar to 17.1% in 2024, marking a troubling trajectory for the country.
Positioned 37th among 44 African countries with the highest inflation rates, Ghana grapples with persistently high inflation, despite aggressive monetary policy measures.
While Ghana, alongside Mozambique and Nigeria, resorted to substantial rate hikes in 2022—up to 750 basis points—such measures failed to completely quell inflationary pressures deeply rooted in supply dynamics.
“Despite the large doses of rate increases in Ghana, Mozambique, and Nigeria, inflation expectations have remained deeply entrenched, and real rates in all countries remain negative, challenging the potency of traditional monetary policy tools. The failure of higher policy rates to reduce inflationary pressures in some countries implies that more innovative instruments should be explored to deal with the supply factors driving the current wave of inflation”, said the report.
“Inflation remains high but is expected to abate due to aggressive monetary policy tightening and receding commodity prices.” the report added.
The AfDB in the report further noted that depreciating exchange rates of African countries have also worsened the inflation outlook, especially in countries with flexible exchange rates asserting, “This complicates the choices facing authorities because imported inflation is difficult to tackle with conventional monetary tools. And further increases in inflation and weakening of national currencies are likely to reduce governments’ capacity to support vulnerable citizens and could push many people into extreme poverty”.
Ghana’s inflation rate went up marginally in January 2024 to 23.5% as it resumed the upward trajectory, data from the Ghana Statistical Service has revealed.
This follows five consecutive months of decline. Inflation stood at 23.2% in December 2023.
According to the GSS, the increase in year-on-year inflation was influenced by a sharp surge in non-food items including housing, clothing, and transport. Non-food inflation increased to 20.5% in January 2024 from 18.7% in December 2023.
Ghana’s policy-makers face a delicate balancing act, compelled to bolster social spending while navigating fiscal vulnerabilities. The resilience of inflationary pressures underscores the imperative for innovative policy tools to recalibrate the economic compass, steering Ghana towards stability amidst economic difficulties.
