Ghana’s Consumer Price Inflation will average 25% and 15% in 2022 and 2023 respectively, Fitch Solutions has revealed.

In a report dubbed “Ghana’s Private Infrastructure Investment Set For Medium-Term Recovery”, it said while inflation will threaten to undermine project revenues and thereby exacerbate revenue risks for both domestic and foreign investors, project costs will go up.

“We expect that a likely increase in construction materials prices would increase project costs and pressure developers to delay investments”, it explained.

Ghana imports large volumes of construction materials, with domestically produced cement amounting to less than 60% of domestically consumed cement throughout the largest part of the past decade.

In 2021, Fitch Solutions said Ghana’s trade deficit for iron and steel products is estimated to have exceeded $1.2 billion, up from an estimated deficit of over $780mn worth of iron and steel products in 2020. 

Ghana to recover in medium term as a supportive market for private infrastructure

In the medium term, Fitch Solutions said Ghana will likely recover as a supportive market for private infrastructure investment in Sub-Saharan Africa, as revenue and project cost risks subside and investors benefit from a comparatively strong institutional and legal enabling environment, as well as relative political stability and a positive track record of private infrastructure investment. 

“We expect inflation to slow down and pressures on the cedi to reduce significantly in 2024, lifting downward pressures on private sector participation in Ghana’s infrastructure sector. Our positive medium-term outlook is further supported by Ghana’s relative long-term political stability in comparison to other regional markets, as well as stable to positive demand forecasts for automobiles, transport and logistics, and general consumption”, it added.

Year-on-year inflation reached 31.7% in July 2022

Year-on-year inflation crossed the 30% mark to hit 31.7% in the month of July 2022, data from the Ghana Statistical Service indicated.

This was the highest inflation rate recorded since late 2003.

However, the rate of inflation slowed down in the month under review, as inflation went up by 1.9% over that of June 2022 (29.8%).

Cement prices hit ¢68 per bag

Recently, cement prices hit ¢68 per bag.

According to some of the leading manufacturers in the country, the action was influenced by a sudden rise in the cost of operations, from July 2022, due to the sharp depreciation of the cedi over the past month.