IC Research Raises End-2024 Inflation Forecast to 19% – 21% Amid Heightened Inflationary Risks
IC Research has revised its 2024 annual inflation forecast upward by 340 basis points, projecting a range of 19.3% to 21.3%.
This adjustment comes in response to anticipated inflationary pressures in the second half of 2024, despite potential mitigating effects from the food harvest expected in Q3 2024.
The new forecast surpasses the Bank of Ghana’s year-end inflation target of 13.0% to 17.0%.
The research firm cited the June 2024 inflation data, which revealed signs of divergence between food and non-food inflation, reminiscent of trends observed between May and July of the previous year.
This divergence may lead to sustained inflationary pressures in H2 2024, particularly given the favorable base effect from the same period in 2023.
Key factors influencing the revised forecast include:
Seasonal Influences: The annual closed fishing season, commencing on July 1, 2024, is expected to maintain elevated prices for fish and seafood in July before easing in August. The closure involves a one-month hiatus for artisanal fishing and a two-month break for industrial trawlers.
Non-Food Inflation: The introduction of new utility tariffs and higher ex-pump petroleum prices, effective July 1, 2024, pose significant inflationary risks. During the recent utility tariff review for Q3 2024, the sector regulator announced electricity tariff hikes ranging from 3.45% to 5.84%, leaving a revenue shortfall of GH906.2 million to be recovered in subsequent quarters. This situation is expected to exacerbate inflationary pressures in the latter half of the year.
Despite these concerns, inflation has been declining, with June 2024 marking the third consecutive month of reduction.
The year-on-year inflation rate edged down by 30 basis points to 22.8%, while month-on-month headline inflation also decreased by 30 basis points to 2.9% in June 2024.
