March Inflation Rate Climbs to a Record High

The inflation rate shot up to a record high just when the interventions announced by the government to revamp the economy began to kick in. Hikes in the prices of consumer goods and services sent the rate of inflation to a more than nine-year high at 19.4% in March, up from 15.7% recorded last month.

The continued and sustained increases in the prices of petroleum products coupled with currency depreciation have remained a major driving factor of the recent surge in consumer prices with the inflation rate climbing up for the tenth consecutive time with an accumulated gain of 12 percentage points over the past 10 months. We anticipate the upward inflationary trend to persist further as the underlying risks to the inflation outlook linger whilst the passage of the electronic levy bill will be expected to lead to a marginal increase in the prices of some consumer goods and services.

Food inflation came in at 22.4% in March representing a 500 basis points (bps) jump over last month’s inflation rate of 17.4%. All the categories under the food and non-alcoholic beverages group recorded increases in their inflation rate as manufacturers and producers priced up their goods and services following the increases in transport and fuel costs.

Compared to the food group, the non-food and alcoholic beverages group recorded a moderate increase in the inflation rate as it rose by 250 bps from 14.5% in February to 17.0% in March. Three sub-group items lead by transport at 27.6% and housing, water, electricity, & other fuels at 21.4% recorded rates higher than the group’s inflation figure.

Across the regions, the inflation rate ranged from 12.5% in the Upper East region to 23.1% in the Brong-Ahafo region. Inflation rates on both local and imported goods rose from last month’s levels at 16.7% and 12.9% to 20.0% and 17.3% respectively.

The monetary policy committee handed down a historic policy rate hike of 250 bps to 17.0% in March after the central bank’s latest forecast revealed an elevated inflation profile in the near term whilst upside risks to the inflation outlook remain. We anticipate further policy rate hikes in the near term until price pressure begins to ease.