Inflation to remain on elevated path, says Fitch Ratings
Ghana’s inflation rate is projected to remain on an elevated path by credit rating agency, Fitch Ratings.
According to the agency, the country’s headline inflation will be driven by upward price pressures arising from sustained high fuel prices and transport costs, a weak local currency [cedi], and an uptick in food inflation.
Fitch in its December 2021 Africa Monitor Report, said the cedi has continued to depreciate, falling from GHS 5.86 to a dollar on June 30, to GHS 6.01 to a dollar on September 28, adding “and we expect it to weaken further to GHS 6.1/$ by the end of 2021. Furthermore, having risen by 19.1% in the year to date, we expect retail fuel prices to remain elevated.”
The agency noted that it expects crude oil prices to average $70 per barrel, from its earlier forecast of $43.2.
“Our Oil & Gas team forecasts that the price of Brent crude prices will average $70.0 per barrel in 2021, up from $43.2 per barrel in 2020, which will keep fuel prices fairly high. As a result of these factors, we forecast average annual inflation of 9.3% in 2021, which is near the top of the BoG’s 6.0-10.0% target range, and will thus disincentivise the Central Bank from cutting in the coming months,” remarked Fitch.
Inflation hit 11% pushing above Bank of Ghana’s target as non-food prices surge…
Recorded inflation rate for the month of October, exceeded the central bank’s target band for a second straight month, making it the highest inflation recorded since May 2020.
Annual inflation accelerated to 11% in October from 10.6% in September.
Government Statistician Professor Samuel Annim announcing the inflation rate for October, said the Month-on-Month inflation between September 2021 and October 2021 was 0.6 per cent with food inflation for October 2021 recording a relatively less increment than non-food inflation which climbed 1.6 percentage points.
He stated that transport, which included fuel, recorded the highest variation of 5.2 percentage points between October 2021 of 14.9 per cent and the percentage 12-month average of 9.7 per cent.
“Contribution of food inflation to overall inflation continues to slow down by 3.7 percentage points,” he pointed out.
Inflation for locally produced items continued to dominate imported items but with a reduced margin from 3.4 to 3.0 percentage points.
Inflation for imported goods was 8.8 per cent, higher than the 8.1 per cent recorded in September, while the inflation for locally produced items was 11.8 per cent, up from the 11.5 per cent recorded in September.
Oil prices, continue to soar this year as it has hit the highest point since 2014, and a shortage of fertilizer that is impacting food production, are likely to fan inflation rise in the country.
