Senior Country Risk Analyst for Sub Saharan Africa at Fitch Solutions, research arm of Fitch Ratings, William Atwell, says he expects Ghana’s average inflation rate to hover around 8.5 per cent end-December 2021.
“Inflation was elevated during the second half of 2020 and that certainly put some pressure on household spending power. But looking ahead to this year, we expect inflation to average around 8.5%, which is lower than the final months of last year,” he said in an interview.
Average year-on-year inflation rate for 2020 according to the Ghana Statistical Service (GSS) was 9.9 per cent. Inflation end-December 2020 stood at 10.4 per cent.
A lower average inflation rate for 2021 coupled with other improved macroeconomic indicators could compel the Bank of Ghana (BoG) to reduce its policy rate thereby reducing lending rates of commercial banks to households and businesses, subsequently boosting consumer and business spending.
Inflation rates for 2020
Ghana begun 2020 with an inflation rate of 7.8 per cent which quickly worsened reaching 10.6 per cent in April on the back of the Covid-19 pandemic and going above the Bank of Ghana’s medium target band of 8+-10 per cent.
It further rose to 11.4 per cent in July occasioned by the panic buying of goods on the back of an imminent lockdown announced by the president.
Prudent monetary policies by the BoG aided in returning inflation to a downward trajectory causing it fall back to a single digit at 9.8 per cent in November 2020. It however, rose back to 10.4 per cent in December 2020 due to the high spending of the public during the Christmas festivities.
