While February inflation rate remains outside the single digit bracket, Barclays says it expects inflation to move to about 8 percent as early as April 2018 and end the year at the same figure.

“Our projections show that inflation may remain in single digits for the remainder of the year, ending it around 8.0% y/y,” Barclays said in a statement.

February inflation

Consumer Price inflation increased to 10.6 percent in February from 10.3 percent recorded in January.

The marginal increase is being attributed mainly to an increase in fuel prices. Food inflation for February also rose to 7.2 percent from 6.8 percent the month before while non-food moved up to 12.2 percent.

Policy easing to resume 

The Bank of Ghana’s inflation expectations survey, showing a decline of all its main categories (businesses, consumers and the financial sector), provides further evidence that there is scope for the current policy stance to be eased.

With the next Monetary Policy Committee (MPC) meeting scheduled for 21-23 March, there may be concerns amongst committee members about potential inflationary pressure from transport and food, with the former being driven by firm international oil prices.  

However, Barclays’ statement continued, “we do not see a reason the BoG should maintain the current stance, particularly as the non-oil economy can benefit considerably from further policy relief.

Indeed, we see scope for at least a further 100bp cut in the policy rate to 19.00% at the March meeting, with further easing in subsequent meetings,” the statement added.

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