The Bank of Ghana has projected that inflation will continue to peak in the first quarter of 2023 and ease to around 25 percent by the end of 2023.
This is according to the Central Bank’s November 2022 Monetary Policy Report.
The report explained that the projection is based on the tightness of the monetary policy as well as the adoption of measures to address liquidity issues in the Ghanaian economy.
“There are, however, upside risks to the outlook, emanating from the persistent upward adjustments in ex-pump petroleum products and transport fares with associated second-round effects on the pricing of goods and services”.
“Additionally, the proposed VAT increase and currency pressures may exert upward pressures on headline inflation. Amid these concerns, however, it is expected that the continued tight monetary policy stance would moderate the spillover effects,” the report noted.
The BoG also indicated that sustained observance of the development of these potential price pressures in the outlook will be vital.
In November 2022, the Central increased the monetary policy rate by 250 basis points from 24.5 to 27 percent in a bid to stem inflationary pressures.
“In the outlook, significant upside risks remain arising from both domestic and foreign sources. Global inflation remains high and persistent, driven largely by food and energy prices. Central banks’ concerted efforts to contain price pressures globally have led to aggressive policy tightening across advanced economies”.
“On the transmission of monetary policy changes to inflation, the Central Bank said there is evidence that the policy rate increases in the past few months have helped dampen the pace of monthly price increases.
“Between May and August 2022, the monthly inflation numbers eased from a peak of 5.1% to 1.9%. However, this was reversed in September and October 2022 on account of additional shocks from upward adjustment in ex-pump petroleum prices, utility tariff adjustments, and transport fare increases”, it added.
