- Inflation expected to fall to 21% in May 2024 and 17% by year-end
- GCB Capital warns of upside risks to inflation due to cedi depreciation and petroleum price hikes
- Tight monetary policy stance to curb inflation risks
Inflation is expected to decrease to 21% in May 2024 and continue to fall to 17% by the end of the year, according to GCB Capital. This decrease is attributed to base effects, but the company warns of potential risks to the near-term outlook due to cedi depreciation and rising petroleum prices.
“The second-round effects remain an upside risk to the near-term outlook,” GCB Capital stated. “We have also seen the multiple upward adjustments in ex-pump petroleum prices, which result in transport fare hikes, and its full pass-through to general prices is yet to come.”
Despite these risks, the Monetary Policy Committee (MPC) maintained a tight monetary policy stance in April 2024, despite a decrease in inflation from 25.8% in March 2024 to 25.0% in April 2024. The MPC forecasts a slightly elevated inflation profile due to cedi depreciation and transport fare hikes, but expects the disinflation process to continue, projecting headline inflation to end in 2024 within the monetary policy consultative clause of 13% to 17%.
GCB Capital concluded that “The decision is consistent with our expectations and the consensus market view as the upside risks to inflation are evident.”
