Ghana’s annual inflation fell to 18.5 per cent in February from 19 per cent recorded in the previous month due to the relative strengthening of the local currency – the cedi, against the greenback, the statistical office announced on its website.
The government expects inflation to ease further in the coming months, as Ghana’s central bank continues to tighten its fiscal policy measures.
The tightening of the fiscal policy is firmly boosted by the $918 million three-year International Monetary Fund (IMF) programme the country adopted in 2015 to revamp growth and boost job creation.
The fund projected the country’s inflation to peak before decelerating to around 10 per cent at the end of 2016. “The stability of the cedi was the major driver in February inflation drop,” local media quoted deputy government statistician, Anthony Amuzu saying.
The cedi is expected to trade at 3.85 against the dollar by the end of this quarter, according analysts, and trade at 4 cedi in a year, but is projected to settle at 3.05 by 2020.
According to Ghana’s statistical office, the food and non-alcoholic beverages group recorded an inflation rate of 8.3 per cent, which is 0.1 percentage points higher than the 8.2 per cent registered in January. Six subgroups of this category recorded rates above the group’s average of 8.3 per cent.
But the non-food group saw a rate of 24.5 per cent, compared to the 25.5 per cent in the previous month, while four subgroups in this group’s rates were higher than the group’s average rate of 24.5
Housing, water, electricity, gas and other fuels listed the highest rate of 41.0 per cent, followed by transport with 30.4 per cent, education with 25.4 per cent and recreation and culture pegged at 25.3 per cent.
Inflation was lowest in the communication subgroup with 14.5 percent, partly to due keen competition among telecommunication companies and a strict legal regime to regulate the sector.
At the regional level, the rate ranged from 13.8 per cent in the Upper East region to 22.0 per cent in the Greater Accra region. Three regions – Brong Ahafo, Ashanti and Greater Accra – recorded rates above the national average of 18.5 percent.
Despite the fall in the February inflation by 0.5 per cent, market watchers believe the rate still remained high and would continue to stir high costs of borrowing and higher interest rates for businesses, as financial markets protect themselves against rising prices.