The Institute for Economic Affairs has described the persistent higher inflation in Ghana to the failure of monetary policy relying on the demand-based Inflation Targeting framework, to deal with underlying supply and cost factors, particularly food prices, fuel prices and depreciation.

According to the economic think tank, inflation will remain high for the rest of the year, with these factors persisting.

Inflation has been stuck in the lower twenties since December 2023, after being brought down drastically from a peak of 54% a year earlier in December 2022.

In a statement, the IEA expressed worry that Ghanaians spend 43% of their monthly budget on food alone, leaving 57% for all other consumer items.

 “We expect inflation to remain at least in the higher teens throughout the rest of the year”.

It agreed with the Bank of Ghana’s inflation forecast of 17-19%  for 2024.

“We note that the BoG [Bank of Ghana] has revised upwards its end-year inflation forecast from the previous 13- 15% (mid-point 14%) to 17-19% (mid-point 18%). This looks more realistic, although disappointing”.

“We have long maintained that it will require the joint effort of the Bank of Ghana and government to address the underlying supply and cost drivers mentioned above to break Ghana’s inflation persistence”, it added.