"Rising Inflation in Ghana and Nigeria Threatens Economic Growth

" Rising Inflation in Ghana and Nigeria Threatens Economic Growth - Deloitte Warns \r\n\r\nSurging inflation in Ghana and Nigeria is expected to weigh heavily on economic activity as businesses contend with spiraling costs and households curb spending, according to Deloitte West Africa\u2019s latest Monthly Inflation Update.\r\n\r\nDeloitte warned that persistent price pressures will exacerbate the ongoing cost-of-living crisis in both countries.\r\n\r\n Election Spending Fuels Inflationary Pressures \r\n\r\nIn Ghana, inflation climbed to 22.1% in October, up from 21.5% in the previous month, driven by higher costs in sectors such as housing, food, and health services.\r\n\r\nDeloitte flagged election-related spending as a key driver of inflation in the coming months, despite the Economist Intelligence Unit (EIU) forecasting year-end inflation at 20.5%.\r\n\r\nIn view of the uptick in inflation, the Bank of Ghana is expected to hold its benchmark interest rate at 27.0% during its final Monetary Policy Committee meeting of the year, opting for stability as policymakers weigh the risks of tightening financial conditions further.\r\n\r\n Key Inflation Drivers \r\n\r\nGhana\u2019s inflation was underpinned by sharp price increases in the following categories:\r\n \r\n \t Alcoholic beverages, tobacco, and narcotics: +31.7% \r\n \t Housing, water, electricity, gas, and other fuels: +27.6% \r\n \t Restaurants and accommodation services: +24.6% \r\n \t Health: +23.9% \r\n \t Food and non-alcoholic beverages: +22.8% \r\n \r\nRegional disparities remain pronounced, with the Upper East region registering a 42.0% inflation rate\u2014the highest in the country\u2014compared to 18.3% in the Eastern region.\r\n\r\n Nigeria Faces a Steeper Challenge \r\n\r\nIn Nigeria, headline inflation reached 33.88% in October, sparking concerns of another rate hike by the Central Bank of Nigeria. Bauchi State reported the highest inflation at 46.68%, while Delta State recorded the lowest at 27.85%.\r\n\r\nThe relentless rise in prices is adding pressure on businesses and households, further undermining economic stability. \u201cThe inflationary spiral threatens to erode consumer purchasing power and heighten operational challenges for businesses,\u201d Deloitte warned.\r\n\r\n Policy Conundrum \r\n\r\nBoth Ghana and Nigeria face a delicate balancing act as policymakers grapple with the dual objectives of controlling inflation and stimulating growth.\r\n\r\nFor now, efforts to stabilize inflation appear to be gaining precedence, though the high cost of borrowing and reduced consumer spending risk constraining economic expansion in 2024.\r\n\r\nAlso, effective fiscal and monetary coordination will be crucial in navigating the path to stability while averting further economic fallout."

"Rising Inflation in Ghana and Nigeria Threatens Economic Growth

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