GCB Capital predicts that inflation will increase to 26.0% in February and March 2024.
This follows a slight 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, mainly 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%.
“All other things being equal, we peg our end-2024 outlook at 16.5% ±1%.”
“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] programme and its potential pass-through and second-round effects on inflation in the coming months,” it said.
It reaffirmed the dangers to inflation associated with any unchecked spending in the run-up to 2024, which would rekindle demand-driven pricing pressures at the height of the election season.
THE DEFLATION PROCESS WAS REVERSED BY INFLATION.
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 reduction in food inflation for the sixth consecutive month, but non-food inflation reversed direction and increased by 180 basis points to 20.50%, 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.
