The Bank of Ghana says inflation will remain within the medium-term target band (8%+\-2), barring any unforeseen shocks.
This is coming after the World Bank projected that Ghana’s inflation rate will end this year at 9.8% and gradually decrease to 6.8% in 2023.
However, the rate of inflation for September 2021 surged to 10.6%, as a result of increase in the price of Housing, Water, Electricity, Gas and other Fuels (18.7%).
The Central Bank stated that the key upside risks to the outlook include the projected uptick in food prices, rising ex-pump prices of petroleum products and possible fiscal pressures in the outlook.
The annual change in consumer prices was 7.8% in June 2021, 2.5 percentage points lower than in the previous quarter and 0.3 percentage points higher than in May 2021.
The drop in headline inflation over the past two quarters was occasioned by a fall in both food and non-food prices.
Food inflation declined markedly to 7.3% in June from 10.8% at the end of the first quarter of 2021. Similarly, non-food inflation dropped to 8.2% from 10.0 percent over the same period of comparison, largely due to slower price growth for housing and utilities.
Underlying inflation also dipped over the review period.
The Bank’s (BoG) core inflation measure, which excludes energy and utility, eased to 7.5% in June 2021, from 10.9% at the end of the previous quarter.
“In terms of drivers, the fall in inflation over the past two quarters was broadly due to shrinking contribution of the food and housing and utilities groups”, the Central Bank pointed out.
Analysis of sub-components of the CPI basket pointed to downward movement in year-on-year inflation for the following sub-groups: Housing and Utilities (14.2% in June 2021 compared with 29.0% in March 2021), Food and Beverages (7.3% compared with 10.8%), Alcoholic Beverages and Tobacco (6.5% compared with 7.0%), Health (6.0% compared with 7.1%), Restaurants and Accommodation (4.8% compared with 6.1%), Information and Communication (4.9% compared with 8.1%), and Insurance and Financial services (5.5% compared with 7.8%). In contrast, prices rose for Transport (13.4% compared with 6.8%); and Education (0.9% compared with 0.4%).
The month of September 2021 recorded the highest inflation rate of 10.6% since the economy started picking up from the effects of the Covid-19 pandemic.
According to the Ghana Statistical Service, the increase in the price of Housing, Water, Electricity, Gas and other Fuels (18.7%) triggered the hike in inflation.
Month-on-Month inflation between August and September 2021 was 0.6% (0.3 percentage point higher than what was recorded in August 2021).
Food inflation (11.5%) in September 2021 was higher than last month (10.9%) and just above the average of the previous 12 months (10.4%). However, Food inflation contribution to total inflation dropped from 50.2% last month to 48.6% in September 2021.
