Gov’t targets 21.5% reduction in headline inflation
Government, through the Central Bank and the use of its monetary tools, seeks to reduce the country’s record headline inflation of 40.4% to 18.9% at end-2023.
The reduction in headline inflation from 40.4% to 18.9% at end-2023 marks a 21.5% decrease on a year-on-year basis.
Making the 2023 budget statement presentation to Parliament on Thursday, November 24, Minister for Finance, Ken Ofori-Atta averred the Central Bank will continue to monitor inflation developments and respond appropriately to contain price pressures.
The end-2023 headline inflation rate target of 18.9%, the Finance Minister noted, is guided by government’s medium-term policy objectives following macroeconomic targets set for the medium-term (2023-2026) that include;
- Overall Real GDP to grow at an average rate of 4.3 percent;
- Non-Oil Real GDP to grow at an average rate of 4.0 percent;
- Inflation to be within the target band of 8±2 percent;
- Primary Balance on Commitment basis to average 0.8 % of GDP in the 2023-2026 period; and
- Gross International Reserves to cover at least 4 months of imports
For the 2023 fiscal year, macroeconomic targets set by government include;
- Overall Real GDP growth of 2.8 percent;
- Non-Oil Real GDP growth of 3.0 percent;
- End-December inflation rate of 18.9 percent
- Primary Balance on Commitment basis of 0.7% of GDP; and
- Gross International Reserves to cover not less than 3.3 months of imports.
latest data indicates that headline inflation accelerated to 40.4 percent in October 2022, from 37. 2 percent in September and 33.9 percent in August.
The rise in the October inflation was broad-based, driven by both food and non food prices.
The Monetary Policy Rate has increased by 1,000 basis points (from 14.5% to 24.5%) since the beginning year as the Central Bank deployed its monetary policy tools to anchor inflation expectations.
Inflation rate increased by 320 basis points (bps) from 37.2% in September to reach an all-year high of 40.4% in October.
The drivers of inflation appeared unchanged from the previous month as Housing, Water, Electricity, Gas, and other fuels rose to 69.6% rise in inflation compared to the 68.8% recorded in September, followed by Furnishings, Household Equipment, and Maintenance (55.7%); Transport (46.3%); Personal Care, Social Protection and Miscellaneous Goods and Services (45.5%) and Food and Non-Alcoholic Beverages (43.7%) which all recorded increases year-on year.
The month-on-month inflation between September 2022 and October 2022 rose by 70bps to reach 2.7%. The inflation rate remains well above the central bank’s inflation target band of 8+/-2%.
Food inflation increased to 43.7% which is up from September’s food inflation of 37.8%. Non-food inflation stood at 37.8%, compared to 36.8% recorded the previous month.
Overall month-on-month food inflation was 3.2% while non-food inflation stood at 2.3%. Inflation for imported goods was 43.7% while inflation for local goods was 39.1%. For the seventh consecutive month running, inflation for imported items exceeded domestic inflation.
At the regional level, the Eastern Region once again recorded the highest inflation rate of 51.1% while the Volta Region recorded the lowest inflation rate of 25.8%.
MONTH | CPI (2018=100) | CHANGE (INFLATION %) | |
MONTHLY | YEARLY | ||
OCT – 2021 | 133.3 | 0.6 | 11.0 |
NOV | 135.2 | 1.4 | 12.2 |
DEC | 136.9 | 0.4 | 12.6 |
JAN – 2022 | 139.7 | 2.1 | 13.9 |
FEB | 143.0 | 2.4 | 15.7 |
MAR | 148.8 | 4.0 | 19.4 |
APR | 156.5 | 5.1 | 23.6 |
MAY | 162.8 | 4.1 | 27.6 |
JUN | 167.7 | 3.0 | 29.8 |
JUL | 173.0 | 3.1 | 31.7 |
AUG | 176.3 | 1.9 | 33.9 |
SEP | 140.6 | 2.0 | 37.2 |
OCT | 144.4 | 2.7 | 40.4 |