Inflation to revert to medium-term band in the next four quarters – 1st Dep. Governor
Headline inflation, according to the First Deputy Governor of the Bank of Ghana (BoG), Dr Maxwell Opoku-Afari, is expected to trend back towards the medium-term target band over the next four quarters (1 year).
“The Bank of Ghana’s forecast indicates that inflation would trend back towards the medium-term horizon over the next four quarters,” stated Dr Opoku-Afari speaking at a training workshop on financial reporting organized by the Journalists for Business Advocacy group.
Headline inflation has shifted above the upper band of the medium-term target, driven mainly by food prices, upward adjustments in ex-pump petroleum prices, transport costs, and passthrough of exchange rate depreciation.
The latest data shows that headline inflation rose sharply to 19.4 percent in March 2022 from 15.7 percent in February on the back of significant increase in food inflation.
According to the 1st Deputy Governor, there are significant upside risks to the inflation outlook which include increased commodity prices, particularly crude oil, and intensified supply disruptions.
The IMF, Fitch Solutions have all warned that inflation will remain elevated within the year with the IMF projecting Ghana t end 2022 with a headline inflation rate of 16.3%
In view of that the World Bank President, David Malpass, has urged the Bank of Ghana and other financial regulators around the world to use all available monetary policy tools to help check rising inflation.
He noted that the situation calls for much tougher regulatory measures to minimize the impact of inflation especially on the poor.
Speaking further at the training workshop and touching on the ongoing Russia-Ukraine war, Dr Opoku-Afari, averred strong recovery process from the Covid pandemic was short-lived due to the war.
“At the start of 2022, the global recovery process seemed to gain some traction from the Covid19 pandemic effects, supported by improved vaccinations and opened economies, despite persisting supply chain constraints. However, these gains have been short-lived due to major upheavals in Eastern Europe. The ongoing conflict, coming on the heels of the Covid-19 pandemic, has heightened uncertainty in the financial markets and triggered commodity price shocks,” he stated.
However, asserting that the economy rebounded strongly from the pandemic, as evidenced by the national accounts data recently released by the Ghana Statistical Service which indicated that overall real GDP growth was 5.4 percent in 2021, higher than the targeted 4.4 percent.
“These developments point to a robust economy that is pushing toward its prepandemic level, though downside risks remain, including potential outbreak of new variants of the Covid-19 pandemic and further headwinds from the Russia-Ukraine war,” he added.
