The African Development Bank (AfDB) is forecasting an average inflation of 17.1% for Ghana in 2024.

This would place the country in the 37th position out of 44 countries in Africa with the highest inflation.

According to its Africa Macroeconomic Performance and Outlook 2024, Ghana will continue to have an exceptionally high inflation rate, higher than the Africa average inflation.

“Despite the large doses of rate increases in Ghana, Mozambique, and Nigeria, inflation expectations have remained deeply entrenched, and real rates in all countries remain negative, challenging the potency of traditional monetary policy tools. The failure of higher policy rates to reduce inflationary pressures in some countries implies that more innovative instruments should be explored to deal with the supply factors driving the current wave of inflation”, it stated.

It continued that “Inflation remains high but is expected to abate due to aggressive monetary policy tightening and receding commodity prices.

“To combat rising inflation and persistent inflationary pressures, several African countries have taken a cue from their counterparts in advanced economies and tightened monetary policies. Some central banks rapidly raised key interest rates in 2022, ranging from 400 basis points in Mozambique and Nigeria to 750 basis points in Ghana”, it pointed out.

Also, AfDB said inflationary pressures in African countries remain strongly entrenched, lagging improvements in the rest of the world.

“Africa’s high inflation contrasts starkly with the deceleration in the rest of the world, with developed economies benefiting most from successive and aggressive monetary policy tightening. As a result, global headline inflation declined from its peak of 8.7% in 2022 to 6.9% in 2023”.

Rising inflation puts additional pressure on countries' fiscal position

It continued that the rising inflation put additional pressure on African countries’ fiscal positions as governments scaled up social spending to cushion vulnerable populations from further erosion in their purchasing power.

It stated that the depreciating exchange rates have also worsened the inflation outlook, especially in countries with flexible exchange rates, adding, “This complicates the choices facing authorities because imported inflation is difficult to tackle with conventional monetary tools. And further increases in inflation and weakening of national currencies are likely to reduce governments’ capacity to support vulnerable citizens and could push many people into extreme poverty”.

Inflation resumes upward trajectory

Inflation went up marginally in January 2024 to 23.5% as it resumed the upward trajectory, data from the Ghana Statistical Service has revealed.

This follows five consecutive months of decline. Inflation stood at 23.2% in December 2023.

According to the GSS, the increase in year-on-year inflation was influenced by a sharp surge in non-food items including housing, clothing and transport. Non-food inflation increased to 20.5% in January 2024 from 18.7% in December 2023.