Inflation Rate Opens 2022 at 13.9%

Ghana continues to experience its share of the rise in global inflation figures with the latest inflation rate hitting its highest in more than five years. The inflation rate began the year jumping to 13.9%, up from 12.3% recorded in December last year as the central bank struggles to keep consumer prices in check. Inflation figures have been on a rising trajectory recording its eighth consecutive year-on-year increase after touching a multi-year low in May 2021 at 7.5%.

The recent and sharp rise in consumer prices has come on the back of the continuous hikes in the prices of petroleum products at the pumps, resulting from a rise in crude oil prices on the international market. The inflationary trend has also been supported by fiscal slippages, imported inflation, and a steady fall in the value of the local currency, mounting pressures on consumer prices. We expect the upward price pressures to persist into the second quarter despite the government announcing a cut on public expenditure by 30%.

After posting a marginal decline in December, food inflation picked up steam as it soared to 13.7% in January from 12.8%, despite its contribution to the national inflation declining from 45.2% in December to 44.2%. Fourteen out of the fifteen sub-group items recorded positive month-on-month inflation rates with only fruit & vegetable juices sub-group printing a deflation of -0.4%.

The non-food and alcoholic beverages group rose for the seventh consecutive time as it peaked at 14.1% in January, up from 12.5% in December. The jump in the non-food inflation group was led by activities in the housing, water, electricity, gas & other fuels sub-group which printed a month-on-month increase of 7.3%.

Across the regions, the inflation rate lingered between 6.9% in the Eastern region to 18.4% in the Greater Accra region. The inflation rate on local goods rose from 13.3% last month to 15.0% in January whilst that on imported goods also climbed up to 11.0% in January from 10.4%.

At the first monetary policy committee meeting, the policy rate was kept unchanged with the central bank bracing itself for an elevated inflationary environment. As the rise in inflation is not expected to recede anytime soon, we expect the central bank to hike the policy rate later in the year.