Inflation to average 15% 2022 – EIU
The Economist Intelligence Unit (EIU) has forecasted that, headline inflation rate for Ghana will remain high, averaging about 15% in the early part of 2022.
The high inflation rate according to the EIU, is expected to be driven by supply-side price pressures, including rising global oil and food prices due to the Russia-Ukraine war and high utility and transport costs.
According to its April 13, 2022, assessment of the Ghanaian economy, average inflation is said to rise from 10% in 2021 to 13.4% in 2022 as prices for global commodities continue to increase, domestic demand starts to pick up further, and the currency depreciates sharply.
Inflation is forecast to average 8.8% in 2023-26, falling towards the lower end of the year.
Inflation reaches 19.4% at end-March 2022
Headline inflation at the end of March 2022, hit 19.4%
Per the data released by the Ghana Statistical Service (GSS), rising cost of food prices mainly accounted for the surge in the inflation rate.
On a month-on-month basis, inflation rose by 3.7 percentage points from 15.7% in February 2022 to 19.4% in March 2022.
According to the figures, food inflation recorded a rate of 22.4% in March 2022, compared to 17.4% in February 2022.
Non-food inflation however recorded a rate of 17.0% in March 2021, from 14.5% recorded in February 2022.
Transport including fuel recorded the highest inflation rate of 27.6%, followed by Housing with an inflation rate of 21.4%.
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Also, local inflation shot up to 20% in March 2022, as against 17.3% of imported goods or inflation.
The Bono Ahafo region recorded the highest rate of inflation of 23.3% in the country whereas the Upper East region recorded the lowest rate of inflation of 12.5%.
The rising inflation means interest rates will continue to surge, whilst cost of credit will also go up.
Cedi expected to end 2022 at GHS 7.87 to the dollar
EIU has also pegged the rate of the cedi’s depreciation against the dollar at the end of year to hit GHS 7.87.
The projected depreciation of the local currency against the dollar for the next eight months of this year, according to the EIU, will be influenced by the import structure of the economy and some actions of the offshore investors in Ghana’s bonds.
The cedi weakened sharply in the first two months of 2022, reflecting increased demand for hard currency due to a strengthening in Ghana’s (structurally import-dependent) business activity and profit repatriation by Ghana-based multinationals.
In a bid to stabilise the cedi, the Bank of Ghana announced foreign-exchange interventions, with $450m to be released via foreign-exchange forward auctions in the first quarter of 2022. As of early March 2022, some $300m had been released.
