Ghana: Negative inflation outlook remains unchanged, says Analysts

Outlook for Ghana’s headline inflation remains negative and expected to remain very high in the near term, says analysts with the State Insurance Company (SIC).

According to them, inflation rate will continue to be high in the face of OPEC+ oil supply cut hence spiking crude oil prices and continuing investor concern over the country’s large fiscal deficit, further putting downward pressure on the cedi.

“Ghana having high exposure to importation will suffer huge rise in the cost of living. We also expect rising inflation to prompt the Central Bank to further hike monetary policy rate,” it added.

Inflation rate in September had accelerated much faster  than expected to the highest level in almost 21 years  reaching 37.2%.

The rate was mainly driven by Housing,  Water, Electricity, Gas and Other Fuels which saw a 68.8%  rise in inflation compared to 46.7% in August followed by Furnishings, Household Equipment and Maintenance  (51.1%); Transport (48.6%); Personal Care, Social Protection  and Miscellaneous Goods and Services (42.6%) and Food  and Non-Alcoholic Beverages (37.8%).

The surge in inflation  in Housing, Water, Electricity and Other Fuels group was  influenced by the implementation of the utility tariff in  September 2022. The month-on-month inflation between  August 2022 and September 2022 stood at 2.0%.

The  headline inflation rate is more than double the upper ceiling  of the central bank’s inflation target band of 8+/-2%. 

Food inflation increased to 37.8% which is up from August’s  food inflation of 34.4%. Non-food inflation stood at 36.8%,  compared to 33.6% recorded the previous month.

Overall  month-on-month food inflation was 2.2% while non-food  inflation stood at 1.7%. Inflation for imported goods was  40.7% while inflation for local goods was 35.8%. For six (6)  months running, inflation for imported items exceeded domestic inflation.

At the regional level, the Eastern Region  recorded the highest inflation rate of 47.1% while the Upper  West Region recorded the lowest inflation rate of 22.9%.