Inflation Eases Back to 23.2% in February

Expectations of a reverse in the recent disinflation environment received a headwind as inflation in February eased down marginally to the level observed at the close of last year. The market’s expectation was a marginal climb in the inflation reading in February duplicating a similar movement in January as the Cedi continued to remain pressured against its major trading partner currencies coupled with increases in the prices of petroleum products at the pumps.

The latest inflation prints released by the Ghana Statistical Service (GSS) this week revealed that the inflation rate fell back to 23.2% in February, having earlier risen from 23.2% in December to begin the year at 23.5%. This was supported by a dip in the month-on-month inflation rate which edged down to 1.6% this month from 2.0% in the previous month.  The release from the GSS further revealed that despite the local currency posting some difficulties, inflation on imported items slowed down in February.

Food inflation recorded its seventh consecutive dip, declining from a high of 55.0% in July 2023 to print at 27.0% in February 2024. Despite the persistent dip in the annual inflation reading for the food category, month-on-month food inflation has been on the rise, soaring from -0.3% in October 2023 to 2.0% this month. The pickup in the month-on-month inflation numbers for the food category was led by Fish & other seafood at 3.6%, Tea at 3.5%, and Vegetables at 3.0%.

The non-food inflation category similarly registered a marginal dip, from 20.5% in January to 20.0% in February. Month-on-month non-food inflation has over the year remained choppy, having risen from 1.0% in December to print at 2.4% in January before inching down to 1.3% in February. Slower growth in some items such as Transport at 0.4%, Housing & utilities at 0.6%, and Insurance & financial services at 0.7% contributed to the lower month-on-month reading.

Across the regions, the inflation rate ranged from 13.1% in the Oti region to 36.1% in the Eastern region. Whilst inflation on locally produced items recorded a marginal increase to 24.6% from 24.2% in January, that on imported items plunged to 20.1% in February from 22.0% in January.

The next sitting of the Monetary Policy Committee due later in the month is widely expected to see the policy rate stalled as the inflationary outlook remains uncertain.