This is barring unanticipated shocks.

According to its January 2024 Monetary Policy Report, the major risk to the inflation outlook is linked to the escalation of geopolitical tensions and potential spillovers to the commodities markets, especially international crude oil prices, which could undermine the disinflation process.

However, it said there are clear indications that the current macroeconomic framework being implemented with the support of the International Monetary Fund-Economic Credit Facility programme is yielding results.

“In the outlook, the disinflation process is expected to continue, although inflation is expected to remain above the upper band of the medium-term target of 8±2 percent until 2025”, it pointed out.

“All the Banks’ [Central] measures of core inflation are on a downward trend and projected to decelerate further, indicating a continued easing of underlying inflationary pressures”, it added.

Moreover, the Bank of Ghana said improved forex inflows from the IMF-ECF disbursements, receipt of the cocoa syndicated loan, and expected funding from the World Bank are expected to improve foreign exchange inflows.

“Also, the Gold for Reserves programme, repatriation of foreign exchange from the mining and oil companies, and a reduction in debt service payments, would provide additional support towards reserve build-up and, in turn, exchange rate stability to help anchor the disinflation process”, it concluded.

Inflation hits 23.5% in February 2024

Inflation went up marginally in January 2024 to 23.5% as it resumed the upward trajectory, data from the Ghana Statistical Service has revealed.

This follows five consecutive months of decline. Inflation stood at 23.2% in December 2023.

According to the GSS, the increase in year-on-year inflation was influenced by a sharp surge in non-food items including housing, clothing and transport. Non-food inflation increased to 20.5% in January 2024 from 18.7% in December 2023.

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According to the January 2023 Monetary Policy Report, the disinflation process, which began earlier in the year, continued through to the last quarter of the year will continue.

This has been buttressed by the Fitch Solutions and other research firms. For instance, UK-based, Fitch Solutions, said inflation will ease throughout 2024 averaging 18% in 2024.

Headline inflation sharply decelerated to 23.2% in December 2023, from a peak of 54.1% at the end of December 2022.

The decline in inflation was driven by both easing food and non-food prices. Food inflation decelerated sharply to 28.7% in December 2023 from 59.7% in December 2022, while non-food inflation also fell to 18.7% from 49.9% over the same comparative period.

The Central Bank also said core inflation has also eased significantly, affirming a broad decline in prices.

It explained that the Bank’s core inflation measure, which excludes energy and utility, more than halved to 24.2% in December 2023, down from 53.2% in December 2022.

Similarly, inflation expectations by the banking sector, businesses, and consumers have declined.

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According to the Central Bank, there are risks to the outlook.

“Risks to the outlook include the second-round effects of the recent upward adjustments in utility tariffs in September 2023 (electricity by 4.22% and water by 1.18%), climatic factors, unexpected cuts in OPEC+ crude oil production, and the escalation of geopolitical tensions which might impact crude oil prices”.

These risks, however, it said, are expected to be moderated by favourable base drift effects, tight monetary policy stance, relative exchange rate stability, expected inflows from the cocoa syndication loan, disbursement of the second tranche of the International Monetary Fund Extended Credit Facility, and from other multilaterals such as the World Bank and African Development Bank

In the outlook, the disinflation process, it stressed, is expected to continue. 

Inflation fell significantly to 26.4% in November 2023 from 35.2% recorded in October 2023.

According to the Ghana Statistical Service, food inflation was the major contributor to the decline in the rate of inflation.

Food inflation dropped by 12.6% to 32.2% in November 2023. The month-on-month rate of food inflation was 0.8%.

For non-food inflation, it also eased to 21.7%, as compared with 27.7% in October 2023. The month-on-month rate of non-food inflation stood at 2.2%.