Headline inflation projected to end the year at 30%
Ghana’s headline inflation is projected to end the year at 30%.
The projection by the Director of Operations at Dalex Finance, Joe Jackson, marks a decline of 12.2 percentage points from the current inflation rate of 42.2%.
According to Mr Jackson, inflation will remain persistently high as the rate of disinflation will be slowed by the GHS 77bn Government deficit financing undertaken by the Bank of Ghana.
“Inflation is expected to reduce to 30% which is still high because the GHS 77bn of deficit financing by the BoG has not been cleared out of the system yet,” he remarked.
The decline in inflation as posited by Mr Jackson is corroborated by Courage Boti, Research Lead at GCB Capital, who asserts that the deviation of the country’s headline inflation from the disinflation trend seen in the last four consecutive months is temporary.
Mr Boti argues that the upward price pressures resulting from the second-round effects of utility tariff hikes, the 2.5% increase in the Value Added Tax (VAT), and the rollout of three revenue measures from May 1, 2023, outweighed the pull factors, thus contributing to the marginal climb in the headline inflation rate.
He further elaborates that the anticipated second-round effects and the delayed impact of the revenue and tariff measures, along with the recent upward adjustments to utility tariffs for Q2 2023, which took effect from June 1, 2023, are likely to lead to another marginal increase in headline inflation for June and potentially July 2023.
However, the outlook remains positive as Mr Boti expects inflation to resume a declining trajectory thereafter. This expectation is supported by the favorable base drift and easing price pressures from the primary drivers of inflation.
