Inflation Closes First Half of the Year at 22.8%

The rate of inflation recorded its third successive dip to close the first half of the year at its lowest in more than two years as the Cedi’s struggles continue to have minimal bearing on imported items and by extension the headline inflation figure. According to data released by the Ghana Statistical Service, the inflation rate edged down by 30 basis points (bps) to 22.8% in June, down from 23.1% in the previous month. Food items came in as the major contributor to the inflation reading as 37 items representing 43.5% of the items with numbers higher than the overall inflation rate came from the local food category.

The dip in the inflation print was, however, supported by a decline in the inflation reading on non-food inflation items as well as that on imported items which has been on a successive decline since March despite the local currency’s 22.7% year-to-date depreciation against the Dollar. Month-on-month inflation similarly recorded a dip from a 2024 year high at 3.2% in May to print at 2.9% in June.

After plunging to a 2024-year low at 22.6% in May, food inflation picked up in June as it rose to 24.0% as prices of staples surged. Fruits & nuts and Vegetables, tubers & plantains with weights of 1.1 and 9.5 recorded inflation numbers of 43.3% and 42.2% respectively. Month-on-month food inflation recorded a sharp rise to 5.1% in June, up from 2.7% in May with some staples such as Okro, Tomatoes, and Green Pepper recording rates in excess of 25.0% on a monthly basis.

The non-food inflation basket inched down to 21.6% in June from 23.6% in May with most of the sub-group items coming in with moderate inflation numbers. Eight out of the twelve sub-group items recorded inflation numbers lower than the group’s inflation rate. This was supported by a sluggish movement in the month-on-month inflation rate which recorded an increase of 0.9%.

Across the regions, the inflation rate ranged from 12.5% in the Oti region to 35.2% in the Upper East region. Inflation on local and imported items recorded diverging results as inflation on local items rose from 24.7% in May to print at 25.0% in June while that on imported items fell from 19.6% in May to 17.5% in June.

The next sitting of the monetary policy committee of the central bank due later in the month is not expected to see any major shift in policy direction despite the persistent dip in the inflation reading. The committee will be expected to remain glued to its wait-and-see stance as risks to the inflation outlook persist.