Ghana’s inflation-average change in price of goods and services is unlikely to hit a single digit until at least late 2017, latest developments in the economy suggest.
The Bank of Ghana (BoG) last review of the Ghanaian economy in November 2015 indicated that without any additional policy adjustment, inflation was likely to drift farther away from the target band and lengthen the forecast horizon into late 2017.
The BoG’s Inflation Outlook Report said “the current central forecast for inflation is based on the assumptions that the exchange rate will stabilized at current levels, fiscal discipline to be maintained to attain all the fiscal targets, growth conditions to continue to moderate as well as no unanticipated hikes on administered prices. “
Inflation, a major determinant of interest rates ended 2015 with a rate of 17.7 percent and could even go further up following huge increases in utility tariffs and fuel prices.
Government inflation target for this year is also likely to be missed after missing the 13.7 percent target for 2015.
The food inflation rate for December 2015 was 8.0 percent compared with 7.9 percent recorded in November 2015.
However, the non-food inflation rate for December 2015 was 23.3 percent compared with 23.2 percent recorded in November 2015.
The inflation rate for imported items in December 2015 (18.3 percent) was 0.8 percentage point higher than that of locally produced items (17.5 percent).
Within the Food group, two sub-groups recorded inflation rates higher than the group’s average of 8.0 percent. They were vegetables and mineral water, softs drinks and fruits.
Within the non-food group, six sub-groups recorded inflation rates higher than the group’s average of 23.3 percent. They were transport, recreation and culture, education, clothing and footwear, furnishings, household equipment and routine maintenance as well as housing, water, electricity, gas and other fuels.
Ashanti Region recorded the highest combined inflation rate of 19.2 percent while the Upper West Region recorded the highest non-food inflation rate of 24.8 percent. Volta Region recorded the highest food inflation rate in December 2015.
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