Ghana’s inflation rate rose to 25.8% in March 2024, the highest level since last November. However, experts say this is not a cause for major concern.
What Caused the Increase?
The rise is partly due to a technicality. Prices fell sharply in March 2023, making this year’s increase seem larger by comparison.
Expert View: Disinflation Still on Track
Economist Courage Boti believes this is a temporary bump and expects inflation to resume its downward trend starting in April. He predicts inflation will fall below 20% by year-end.
Reasons for Optimism:
- Ghana’s IMF program promotes fiscal discipline.
- Recent central bank actions may reduce money supply and borrowing costs.
- Easing energy supply issues should help stabilize prices.
Food vs Non-Food Inflation:
While food inflation reached 29.6%, local food price increases were significant, suggesting imported food is not the sole driver.
Other Interesting Points:
- Health care costs are a new contributor to inflation.
- Cedi depreciation and rising fuel prices could cause future inflation bumps.
- Despite the March rise, the month-on-month inflation rate is actually decreasing.
Overall:
The recent inflation increase seems temporary, with a return to disinflation expected soon. However, potential government spending increases before the election could pose a risk in the latter half of 2024.
