Inflation Rate Climbs to 15 Month High

Ghana is currently experiencing its share of the recent spike in global inflation figures after consumer prices rose for the fifth consecutive time to its highest since July, 2020. A strong pickup in economic activities as most economies emerge from the pandemic coupled with hikes in the cost of energy is having a huge toll on the prices of consumer goods and services globally.

Ghana’s inflation began the last quarter of the year at 11.0%, up from 10.6% printed in September. Persistent increases in the prices of petroleum products, Cedi depreciation, and tight fiscal conditions pose significant risks to the inflation outlook despite the central bank’s expectations of easing inflation trend on the back of improving harvest. The inflation rate is further expected to remain above the upper bound of the medium-term inflation target band going into the festive season, marked by increased economic activities.

Food inflation eased for the first time in five months in line with its declining contribution to the national inflation basket. It was reported at 11.0% in October, down from 11.5% in September. Food and non-alcoholic beverages’ contribution to the overall inflation came in at 44.9%, its second consecutive drop after peaking at 50.2% in August.

The inflation on non-food and alcoholic beverages’ group recorded its fourth consecutive jump in October as it rose from 9.9% in September to 11.0%, largely driven by housing & utilities, and transport sub-groups.

Across the regions, the inflation rate ranged from 1.9% in the Eastern region to 19.2% in the Upper West region. Local and imported goods both printed increases in their inflation figures from 11.5% and 8.1% in September to 11.8% and 8.8% in October respectively.

Factors such as mounting risks to the inflation outlook, pickup in medium to long-term Treasury yields, and concerns over offshore investors repatriating matured bonds proceeds will remain high on the agenda of the Monetary Policy Committee as they meet to determine the last policy rate for the year. These concerns are however expected to force either a monetary policy rate stay or hike.