Ghana Inflation Rate at Highest Since 2009

Ghana’s inflation rate climbed to the highest level in more than 12 years in March as supply shocks caused by the war in Ukraine stoked increases in food, fuel and fertilizer prices.

Annual inflation accelerated to 19.4% — the highest since August 2009 — from 15.7% in February, Government Statistician Samuel Kobina Annim told reporters Wednesday in Accra, the capital.

The rate breached the ceiling of the central bank’s target band of 6% to 10% for a seventh month and was above the 16.5% median estimate of eight economists in a Bloomberg survey. Food-price growth surged to 22.4% year-on-year from 17.4% in February, while non-food inflation accelerated to 17% in March from 14.5% in the previous month.

“We were not expecting an increase of this magnitude,” Razia Khan, head of research for Africa and the Middle East at Standard Chartered Bank, said. “It calls into question whether there will be a near-term peak” in the inflation rate, she said.

The faster-than-expected increase comes after the monetary policy committee lifted its key rate by 250 basis points last month to curb inflation and the government introduced spending cuts and passed a tax on electronic payments to rein in its budget deficit and ease investor concerns about the credibility of the nation’s fiscal targets.

Sustained increases in the inflation rate are likely to place pressure on the central bank to lift borrowing costs in May as real interest rates are now negative, after turning positive last month when the MPC lifted rates. Ghana prefers to have a high differential between its benchmark interest rate and inflation to attract investment flows.

The yield on Ghana’s 2026 Eurobond rose marginally to 14.6% by 10:50 a.m. in Accra. The cedi gained 0.1% to 7.5589 per dollar.