The Bank of Ghana has reiterated that inflation is likely to peak in the first quarter of 2023 and gradually ease thereafter.

However, headline inflation is projected to remain above the upper band of 8±2 percent until the second half of 2025.

In its January 2023 Monetary Policy Report, the Central Bank said its decision to keep the policy rate high was due to the significant upside risks to the inflation outlook.

On the domestic front, the report said the continuous monetary policy tightening and the relative stability in the exchange rate in December 2022 led to some moderation in the pace of monthly price acceleration.

However, the underlying inflationary pressures remain broadened and could be reinforced by additional shocks in the near-term with the announcement of new revenue measures in the 2023 Budget, additional exchange rate pressures, and upward adjustments in utilities and ex-pump prices.

Meanwhile, the bank’s survey of consumers, businesses, and the financial sector showed that inflation expectations eased in December 2022.

This indicated agents’ expectations of moderation in inflationary pressures on the horizon.

In December 2022, monthly inflation started to decline from 8.6% in November to 3.8%, reflecting a slowdown in the rate of increase in inflation.

Month-on-month food inflation also decelerated from 10.4% to 4.1%, while non-food monthly inflation also slowed from 7.2% to 3.6% over the same comparative period.