World Bank forecasts end-year inflation of 9.8% for Ghana

Ghana’s inflation rate will end this year at 9.8 percent in line with the Bank of Ghana’s target of 8%, plus or minus two (+/-2), the Africa Pulse Report by the World Bank has predicted.

The expected 9.8% inflation rate means average change in price of goods and services would be marginal from now till the end of the year (2021). Inflation surged to 9.7% in August 2021 due to increase in food and transport prices, and has surged further to 10.6% in September.

According to the World Bank, the recent surge in inflation is due to a weaker cedi coupled with a rise in food prices.

However, inflation would decline further next year, signalling a reduction in interest rates.

“In Ghana, weak domestic currency combined with a rise in food prices pushed headline inflation from 9% year-on-year in July to 9.7% in August 2021, slightly closer to the upper bound of the official target band of 6 to 10%. It is estimated to remain close to the upper bound at 9.8% in 2021 and gradually decrease to 6.8% in 2023,” the report said.

“In the West and Central Africa subregion, inflation in Nigeria remained high at 17.4% year-on-year in July 2021, although it has been decelerating slightly for the past four consecutive months. The average inflation for this year is projected at 16.5%, way above the official target band of 6 to 9%,” the report explained.

Meanwhile, despite inflation being lower in Ghana than Nigeria, cost of loans in Nigeria is less expensive than in Ghana.

According to the Africa Pulse Report, inflation rates have remained relatively under control across many countries in Africa. For instance, 35 out of 47 countries had single-digit rates of consumer price inflation last year, and the number of countries is estimated to increase to 38 in 2021.

At the same time, the report stated that the expectation of low-interest rates for a longer period in advanced economies is enabling African central banks to keep an accommodative monetary policy.

READ ALSO: Inflation Rate For September Reached 10.6%

The inflation rate for September 2021 increased by 0.9 percentage points to 10.6%, which was higher than the 9.7% recorded in August, the Ghana Statistical Service (GSS) has announced.

The 10.6 percentage inflation rate was the highest the country has recorded since the economy started picking up from the ravaging effects of the Covid-19 pandemic.

According to the statistical service, the month-on-month inflation between August and September 2021 was 0.6%, some 0.3 percentage points higher than the figure recorded in August 2021.

The service pointed out that housing, water, electricity, gas and other petroleum products recorded the highest inflation rate of 18.7%.