Consumer inflation rises for second consecutive month, hits 22.1% in Oct

By Joshua Worlasi AMLANU

Amid the recent upward adjustment of central bank inflation target, Ghana’s inflation has surged for a second consecutive month to 22.1 percent in October 2024.

This marks a rise from 21.5 percent in September, according to the Ghana Statistical Service (GSS).

This uptick underscores ongoing inflationary pressures affecting essential goods and services, driven by factors such as currency depreciation, fuel price hikes and rising cost of food.

Monthly inflation however slowed slightly, showing a 0.9 percent rise from September; down from 2.8 percent in the previous month.

Food inflation continued to be a significant factor, with a year-on-year increase of 22.8 percent in October. Non-food items saw a relatively lower inflation rate of 20.9 percent.

Key drivers of inflation include the Food and Non-Alcoholic Beverages category, which rose by 22.8 percent year-on-year – fuelled by rising prices of staples such as grains and vegetables. Meanwhile, housing, transport and healthcare costs also contributed to inflationary pressures, reflecting increased utility costs, fuel price volatility and persisting supply chain disruptions.

In an earlier response to September inflation data, the Bank of Ghana (BoG) revised its year-end inflation target to 18 percent; up from an earlier optimistic projection of 17 percent.

BoG Governor Dr. Ernest Addison citied a need for caution, given “upside risks” like global economic uncertainties and currency fluctuations.

“Looking forward, we acknowledge potential risks in the outlook. Our projections now suggest that inflation could slightly exceed the original target, reaching 18 percent by year-end,” Dr. Addison stated at the time, during the IMF/Ministry of Finance joint press briefing.

This follows a period of optimistic projections from the BoG, which had previously cut rates in response to consistent disinflation. However, a surprise inflation surge in September sparked questions about the rate cut’s timing, as both fuel price volatility and exchange rate pressures intensified.

BoG’s new target remains more conservative than some private sector estimates.

DataBank, a financial services firm, predicted inflation could reach as high as 23.5 percent by year-end, driven by fluctuating fuel costs and persistent currency depreciation.

“We expect headline inflation to settle at approximately 21.5 percent ± 200 bps,” the firm noted in its half-year report.

Locally produced items saw higher inflation than imported goods, with inflation on local products reaching 23.4 percent. Meanwhile, inflation on imported items was reported at 17.0 percent – underscoring the domestic cost pressures that have been building up due to structural and supply chain issues within Ghana.

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