Inflation Falls to a Two-Year Low in August

The rate of increase in the general price levels of consumer goods and services recorded a dip in August 2024 relative to the price levels in the same period last year. This development is the fifth in a row after the inflation rate peaked at a 2024-year higher at 25.8% in March. The drop in the inflation reading came on the back of some level of deflation experienced in August as a number of items led by Fruits & nuts, Milk & other dairy products, and Oils & fats recorded significant decreases in their prices.

The national inflation rate as reported by the Ghana Statistical Service slowed down from 20.9% in July to print at 20.4% in August, the lowest in more than two years. Month-on-month inflation rate saw a drastic decline from 2.1% in July to record a deflation of 0.7%, the least in more than five years. A persistent drop in the prices of petroleum products amidst some bit of calm in the currency market helped to sustain the drop in consumer prices.

Food inflation saw its second consecutive dip in August, having slowed down from 21.5% in July to print at 19.1%, supported by a 29.4%, 15.3%, and 8.1% deflationary number recorded by Fruits & nuts, Milk & other dairy products, and Oils & fats sub-categories respectively between July 2024 and August 2024. Month-on-month food inflation fell to a record -2.2% in August, down from 1.7% in July as eight out of the observed fifteen sub-group items recorded price declines.

The non-food basket, however, registered an uptick in its yearly reading from 20.5% in July to 21.5%. Month-on-month non-food inflation on the other hand plummeted to 0.7% in August from 2.4% in July. Five sub-group items led by Housing & utilities and Restaurants & accommodation services at 31.8% and 29.5% recorded numbers higher than the group’s year-on-year inflation rate.

Across the regions, the inflation rate ranged from 10.1% in the North East region to 27.8% in the Upper East region. Inflation on imported items saw its first surge in five months to 16.1% in August from 15.6% in the previous month as the Cedi’s depreciation began to hit hard on consumer prices. Inflation on locally produced items slowed for the second consecutive time to 22.2% in August from 23.3% in the previous month.

The Monetary Policy Committee (MPC) of the central bank meets later in the month where it is expected the committee would follow the steps of other major central banks to hand down its first rate cut in years as recent inflation numbers support a rate cut.