Headline inflation to slowly inch up in 2022
Headline inflation rate is projected by the Center for Economics, Finance and Inequality Studies (CEFIS), is to increase this year.
The projected increment in headline inflation is however, expected to happen at a slow rate.
CEFIS in a report noted, “The increasing rate of the monetary policy rates over the recent quarters does not predict a decrease in price levels. This coupled with the not too pleasant macroeconomic variables all points to the fact that inflation would largely continue to rally up in the 2022 albeit at a slow rate.”
“liquidity tightening on the international financial market, coupled with the uninspiring debt sustainability level for Ghana measured by the Debt to Gross Domestic Product ratio may mean that the government will have contract debt at a higher cost than before,” it added.
This it said will inch up inflation, which will affect the cedi negatively.
Inflation went up to 12.2% in November, 2021, the highest since the rebasing of the Consumer Price Index was done in 2019, the Ghana Statistical Service stated.
Housing, Water and Electricity (20.5%) again topped the list of items in the inflation basket that contributed to the rate of increment.
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Month-on-month inflation between October and November 2021 was however 1.4%.
Food inflation (13.1%) was higher than both last month food inflation (11.5%) and the average of the previous 12 months (10.4%).
Touching on the country’s exports and imports, CEFIS forecast exports to fairly improve in 2022 with imports to also increase this year, a situation it said can impact on the value of the cedi.
“Although uncertainties exist about how to deal with new variants of Covid-19, the world economy has learnt a lot to deal with the pandemic. Total shut down as experience in the year 2020 is not likely in the short term”, it said.
“However, demand for Ghanaian exports is expected to increase in the year 2022,” it added.
“We expect imports to increase in the year 2022, this notwithstanding the likely imposition of the controversial reversal of the Benchmark Value discount on selected imported goods. Aside imports will increase in the short to the medium term, as Ghana is yet to change its stand as an import oriented economy,” it further stated.
