Inflation is expected to decline to 24.6% year-on-year in April 2024, from 25.8% recorded in March 2024, IC Securities has disclosed.

However, the month-on-month inflation will increase to 1.4%.

IC Securities also revised its end-of-year inflation to 16.9% plus or minus 1.0 percentage points.

This is against its earlier forecast of 16.1% plus or minus 1.0 percentage points.

“Our estimations suggest that the 10.6% year-to-date depreciation of the Ghanaian Cedi could elevate Ghana’s annual inflation profile by between 80 basis points – 100 basis points at end of 2024 as the FX [foreign exchange] pressures pass through higher transport fares, utility tariffs, and imported items.”

In the March 2024 CPI data, transport inflation witnessed the steepest rise in its share of headline inflation, climbing from the 11th most influential item to the 8th position.

Despite the slightly elevated upside risk to inflation, iC Securities said the spike in March 2024 was largely expected on the back of unfavourable base effect.

IC Securities maintained its expectation for a generally non-linear disinflation path in 2024 and viewed the March 2024 upsurge as a transitory bump on the disinflation journey.

Inflation surged to 25.8% in March 2024

Headline inflation quickened by 260 basis points to 25.8% year-on-year in March 2024, slightly lower than the projected 26.0% and the market consensus of 26.4%.

“In our view, the upsurge in the March 2024 annual inflation mostly reflects the impact of unfavourable movements in the CPI level against the comparable month of 2023 with FX and energy prices adding renewed upside. Specifically, we observed a 0.2% month-on-month decline in the CPI in March 2023 whereas the March 2024 CPI increased by 0.8% m/m. This contrasting CPI movement created an unfavourable base effect in the computation of the year-on-year inflation for March 2024, underpinning the upsurge”.