Ghana Braces for More Economic Challenges

Ghana’s inflation is expected to rise to 23.9% in February, marking the second consecutive monthly increase. This follows a spike in inflation in January, the first increase in six months.

According to a report by IC Research, the surge in inflation can be attributed to levies on the transportation and manufacturing sectors, such as the carbon levy, as well as increased excise duties on imported plastic packaging, cider, and beer.

The report projects annual and monthly inflation rates of 23.9% year-on-year and 2.2% month-on-month in February 2024. This is expected to reduce the real policy rate and likely keep the March 2024 MPC rate decision on hold at 29.0%.

Despite positive indicators such as a strong start to the year by the Ghanaian Cedi and stable energy prices, the increase in inflation is seen as a potential dampener on market optimism.

In January, Ghana experienced a decrease in inflation for the first time in six months, with the rate rising from 23.2% in December 2023 to 23.5% in January 2024. This decrease reduces the likelihood of another rate decrease and may lead to adjustments in economic forecasts.

The increase in non-food inflation to 20.5% year-over-year, along with a decrease in food inflation to 27.1% year-over-year, contributed to renewed price pressures, according to MyJoyOnline.