GCB Capital predicts that in February and March of 2024, inflation will increase even further, reaching a level close to 26.0%.
This comes after a small rise in inflation from 23.2% in December 2023 to 23.5% in January 2024 on an annual basis.
Inflation increased by 0.03 percentage points, mostly due to unfavorable base drift.
All else being equal, inflation will revert to the path of disinflation starting in April 2024, predicts GCB Capital.
Thus, as of May 2024, headline inflation is predicted to be less than 20.0%.
“We expect headline inflation to print sub-20% from May 2024”.
“We therefore peg our end 2024 outlook at 16.5% ±1%, all things being equal”, it added.
“We note risks to inflation from the simmering cedi depreciation despite the FX (foreign exchange) liquidity cushion from disbursements under the ongoing IMF [International Monetary Fund] program and its potential pass-through and second-round effects on inflation in the coming months”, it mentioned.
The risks to inflation from unchecked spending in the run-up to 2024 were emphasized, as it might rekindle demand-driven pricing pressures around the height of election season.
Ghana’s headline inflation unexpectedly reversed the trend, rising by 30 basis points to 23.5% in January 2024 after declining for five straight months since August 2023.
January 2024 saw a reversal in the trend of declining food inflation for the sixth consecutive month. Non-food inflation increased by 180 basis points to 20.50% in January 2024, highlighting the rise in headline inflation.
The headline, food, and non-food inflation rates increased slightly to 2% (+80 basis points), 1.6% (+30 basis points), and 2.4% (140 basis points), respectively. The month-to-month inflation pattern remained undulating. The simmering price pressures were evident in this.
In January 2024, eleven of the twelve divisions in the non-food inflation basket had higher inflation rates compared to the previous year. These divisions were led by education (+5%), health (+3.6%), housing (+3.1%), and transportation (+1.2%).
Twelve (12) of the thirteen (13) divisions had increased inflation month over month; the transport sector went from 0.1% deflation in December 2023 to 0.5% inflation.
