BoG Anticipates Rise In Inflation Despite Expected Near-term Decline

The Bank of Ghana anticipates an increase in inflation rate in the country despite an expected decline in the near-term.

In its July Monetary Policy report, it said the Committee’s assessment found that the risks to the inflation profile may elevate as a result of the second round effects of food prices.

It added, “Underlying measures of inflation have all ticked up in May 2023…Although inflation is expected to decline in the near-term, baseline forecasts show a slightly higher elevated profile in the year ahead, which, if not contained, could embed in underlying inflationary pressures.”

As such, it said Ghana’s macroeconomic framework requires decisive tightening from both the fiscal and monetary side to anchor inflation expectations firmly on a declining path.

“It is important that policy responds appropriately and decisively to prevent these risks from becoming embedded and consequently derail the disinflation process,” it continued.

In May 2023, Ghana saw a surge in inflation for the first time since November 2022.

The country recorded an inflation rate of 42.2% in May from 41.2% in April. In June, it recorded an inflation rate of 42.5%.

The Central bank and the Ministry of Finance have both attributed the increase to a variety of factors, including higher food prices, implementation of new tax measures, and utility tariff adjustments.

“In the coming months, the committee will monitor closely incoming inflation data and will respond appropriately, if needed, should inflation persist,” the Central Bank noted.