Disinflation process remained sluggish in first quarter of 2024 – BoG says
Governor of the Bank of Ghana (BoG), Dr. Ernest Addison, has noted that the country’s disinflation process exhibited notable sluggishness during the first quarter of 2024.
Inflation, which had receded to 23.1 percent in December 2023, climbed to 25.8 percent by the close of the first quarter of 2024. This deceleration in disinflation was primarily driven by escalating food prices, particularly seasonal food crops.
By April, inflation eased slightly to 25 percent, bolstered by improved supplies of seasonal food crops. However, this was tempered by rising non-food inflation, a consequence of exchange rate pass-through effects.
Food inflation saw a reduction to 26.8 percent in April 2024, down from a peak of 29.6 percent in March. Concurrently, non-food inflation increased to 23.5 percent from 22.6 percent over the same period.
Despite the overall slow progress in reducing inflation, the Governor notes that underlying inflationary pressures remain well-contained.
The core measures of inflation monitored by the Bank of Ghana continued to show signs of easing. Excluding price increases in energy and utility items from the consumer basket, core inflation moderated to 24.8 percent in April 2024, down from 26.3 percent in March.
Dr. Addison’s assertion highlights the complex dynamics influencing Ghana’s inflation landscape. The interplay between food and non-food inflation underscores the challenges faced by the central bank in its efforts to stabilize prices. The seasonal nature of food price volatility, coupled with external factors such as exchange rate fluctuations, further complicates the disinflation process.
The reduction in core inflation suggests that, aside from the more volatile components, there is a gradual easing of inflationary trends.
The Bank of Ghana’s continued vigilance and adaptive policy measures will be crucial in navigating these inflationary challenges. As the year progresses, the central bank’s ability to balance these factors will play a pivotal role in maintaining economic stability and fostering a conducive environment for growth.
