Inflation outlook still negative over sustained cedi depreciation – Analysts say

Inflation outlook still negative over sustained cedi depreciation – Analysts say

Inflation outlook for the near term remains negative as inflation is expected to remain high over sustained depreciation of the local currency.

According to economic analysts at SIC, it expects transportation inflation to significantly contribute to the rise in price levels of goods and services as Bulk Oil Distributors (BDCs) continue to adjust upwards cost of imported fuel on the back of the continuous depreciation of the cedi.

“Our inflation outlook is unchanged. We expect  inflation rate to remain relatively high in the near  term as the sustained devaluation of the cedi  means BDCs would continue to adjust the cost of  imported fuel upwards. The consequential effects  will be fuel price hikes at the pumps by OMCs,  increments in transportation fares, and increasing  cost of production to firms. We expect transportation inflation to significantly contribute  to the rise in price levels of goods and services  across the nation,” Senior research analyst with SIC, Godwin Odoom stated.

 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%.