Inflation Inches Up Marginally in January 2024

After months of a steady decline in the inflation rate, with the rate of inflation undergoing a sharp decline from a more than 20-year high to close the year 2023 at its lowest in nearly two years, the consumer price index began 2024 recording a marginal increase from last year’s closing rate. According to the data released by Ghana’s statistical service, the annual inflation rate edged up by 30 basis points (bps) to print at 23.5% in January 2024, up from 23.2% in December 2023.

The pickup in the year-on-year inflation rate after months of undergoing a downward trend was supported by a significant increase in the month-on-month inflation figure which rose from 1.2% in December last year to print at 2.0% in January. The data further revealed that substantial increases in the prices of some non-food items accounted for the jump in the inflation numbers.

Although year-on-year food inflation extended its downward trajectory, coming in with a dip from 28.7% in December to 27.1%, month-on-month food inflation inched up from 1.3% in December to 1.6% in January. Whilst Water stayed the same at 8.4% between December and January with the lowest annual inflation figure in this category, inflation on Tea & other plant products went further up to top the food category at 71.2%.

Both the yearly and monthly inflation readings for the non-food category registered increases as nearly 60.0% of the items in this category recorded numbers above the overall inflation figure. The annual inflation rate for the non-food basket jumped up from 18.7% in December to begin the year at 20.5% whilst the month-on-month inflation reading climbed up from 1.0% in December to 2.4%. The top drivers of this category included Electricity & other fuels at alcoholic beverages at 39.7% (y-o-y) and Electricity & other fuels at 9.7% (m-o-m).

Across the regions, the inflation rate hovered from 14.4% in the Greater Accra region to 37.1% in the Eastern region. Inflation on local and imported items both saw increases from 23.8% and 21.9% in December to 24.2% and 22.0% in January respectively.

The first Monetary Policy Committee sitting in the year saw the committee hand down its first policy rate cut in nearly two years. Although, the committee noted the emerging recovery it warned of the need to maintain a strong policy stance to consolidate the disinflation gains.