According to GCB Capital, inflation is expected to rise further in February and March 2024, reaching up to 26.0%. This is due to a slight increase in year-on-year inflation, which rose from 23.2% to 23.5% in January 2024.
The increase was primarily due to unfavourable base drift. However, GCB Capital predicts that inflation will start to decrease from April 2024 and expects it to be below 20.0% from May 2024 onwards.
GCB Capital also predicts that inflation will be around 16.5% ±1% by the end of 2024, assuming all things remain equal. However, it warns that there are still risks to inflation, such as the potential effects of cedi depreciation and any uncontrolled spending leading up to the 2024 political season.
In summary, GCB Capital expects inflation to rise in the short term, but to return to disinflation from April 2024 onwards, with inflation dropping below 20.0% from May 2024. However, risks to inflation remain, and the situation will be closely monitored.
Inflation reversed the disinflation process
In January 2024, Ghana’s headline inflation unexpectedly increased by 30 basis points to 23.5%, ending a five-month decline. Non-food inflation rose by 180 basis points to 20.5%, while food inflation continued to decrease for the sixth consecutive month.
Headline, food and non-food inflation all increased marginally on a month-to-month basis, indicating ongoing price pressures.
In January 2024, eleven out of twelve divisions of the non-food inflation basket recorded higher rates of inflation compared to the previous year. Education had the highest rate of inflation at 5%, followed by health at 3.6%, housing at 3.1%, and transport at 1.2%.
On a month-to-month basis, twelve out of thirteen divisions recorded higher inflation, with the transport division switching from a deflation of 0.1% in Dec-2023 to an inflation of 0.5%.
