The African Development Bank is projecting an end-year inflation of 45% for Ghana in 2023.

This will be the highest in West Africa and expected to keep interest rate rates above 25%.

The forecast is s coming on the back of a four-month increase in inflation to 43.1% in July 2023.

 “Within   the   West   Africa   region,   inflation   is projected to be highest in Ghana (45%), Nigeria (17%), Sierra Leone (27%) and the Gambia (12%).  Except Nigeria, local currencies in the three other   countries   experienced   double   digit depreciation in 2022.  This is expected to continue in the medium term”, the report pointed out in its West Africa Economic Outlook Report.

The multilateral institution also put the average inflation in Ghana in 2023 at 38%.  

Inflation is however expected to reduce sharply to about 17% in 2024.

The country’s high inflation has largely been driven by Food and Non-Alcoholic Beverages Division, averaging about 50% this year.

 The AfDB warned that a further hike in the Bank of Ghana’s policy rate may do more harm than good to growth prospects.

“Therefore, amid already high policy rates (e.g., policy rate of 18% in Nigeria, 29% in Ghana and 19% in Sierra Leone), further rate hikes might do more harm than good to growth prospects”.

Furthermore,  rate  hikes  might  not  yield  the   expected   result   of   strengthening   the   local    currency  by  attracting  more  capital  inflows   due   to   global   risk   aversion.  

In West Africa, Benin and Niger will record the lowest inflation of about 3.0% respectively.