GHANA’S September inflation dropped to 38.1 % showing signs monetary tightening by the Bank of Ghana (BoG) is paying off.
The drop is set to hopefully provide space for the regulator to hold borrowing costs unchanged next November.
Government Statistician at the Ghana Statistical Service (GSS), Prof Samuel Annim said during a regular monthly briefing in Accra yesterday that inflation for food and non-alcoholic beverages declined further to 49.4% from 51.9% in August, while non-food inflation declined by 1.6 percentage points to 29.3%.
Dr Addison at the last Monetary Policy Committee (MPC) press briefing observed that inflation was trending downwards and “ as we continue to make progress on that front, we expect interest rates to correct and then the interest rates would also be moving in the right direction.”
The Bank has projected inflation at 29% by close of 2023. Dr Addison reiterated his 29% projection, saying, “the environment has stabilised so the situation cannot get any worse than where it is.”
Prof Kobina Annin is Head of the GSS
Dr Addison maintained that “we are beginning to see some evidence which is pointing at different numbers and we are ready to discuss those with the IMF, including the outlook of 29% that we are projecting for the rest of the year, and what that means for monetary policy going forward,”
The continued maintenance of a tight monetary policy stance and relative exchange rate stability had contributed significantly to the disinflation process observed in the year thus far.
IMF reviews Ghana’s 2023 average inflation
Meanwhile the International Monetary Fund (IMF) has lowered Ghana’s average inflation forecast for 2023 to 42.2% from the earlier 45.4%.
It is also forecasting an end-year inflation of 31.3% higher than government’s 29%
According to its 2023 World Economic Outlook (WEO), this will however be among the highest in Sub-Saharan Africa.
In 2022, Ghana’s average inflation was estimated at 31.9% whilst the end-of-year inflation stood at 54.1%
Ghana’s inflation slowdown in August 2023
Ghana’s inflation slowed down in two months to 40.1 percent in August following an easing in food inflation.
According to data from the Ghana Statistical Service, Food inflation witnessed a decrease to 51.9% in August 2023, from the 55.0% the previous month.
Non-Food Inflation also dropped by 2.9% to 30.9% in August 2023.
For the first time in the year, inflation for imported products recorded a rate lower than locally produced items. Whilst inflation for for locally produced items was 42.4%, inflation for imported items was 36.2%.
BoG projects 3% growth
At the most recent MPC press briefing in Accra, Dr Addison projected a 3 % growth target for Ghana by end of 2023, double the target projected by the International Monetary Fund (IMF) under Ghana’s Extended Credit Facility (ECF) programme.
Dr Addison said his outfit would meet the visiting IMF team to discuss government’s improving economic indicators which he was confident would culminate in doubling the 1.5% growth target the programme had projected.
“This is the opening meeting with the IMF and we have to convince them that from the indicators that we are seeing, we think that the 1.5% projection is too low,” he said.
The Governor indicated that government would provide the evidence to the IMF team which evidence will include data from the GSS and the real composite index of economic activity, “that we have seen which makes us think that we will do better than the 1.5% that the fund is projecting.
Dr Addison argued that the major economic indicators were improving and was confident the economy would soon be set on a growth path.