Inflation will remain elevated in the coming months, due to upward price pressures arising from sustained high fuel prices and transport costs, a weak cedi, and an uptick in food inflation, Fitch Solutions, research arm of ratings agency, Fitch Solutions has stated.

In its December 2021 Africa Monitor Report, it said the cedi has also continued to depreciate, falling from ¢5.86 to a dollar on June 30, to ¢6.01 to a dollar on September 28, adding “and we expect it to weaken further to ¢6.1/$ by the end of 2021.”

The report explained that “furthermore, having risen by 19.1% in the year to date, we expect retail fuel prices to remain elevated.”

Fitch Solutions also said it expects crude oil prices to average $70 per barrel, from its earlier forecast of $43.2.

“Our Oil & Gas team forecasts that the price of Brent crude prices will average $70.0 per barrel in 2021, up from $43.2 per barrel in 2020, which will keep fuel prices fairly high. As a result of these factors, we forecast average annual inflation of 9.3% in 2021, which is near the top of the BoG's 6.0-10.0% target range, and will thus disincentivise the Central Bank from cutting in the coming months.”

Fuel price increases push inflation to 11% in October 2021

As expected, Inflation – which is the average change in price of goods and services – shot up by 0.4% to 11% in October 2021.

This was triggered by increase in Transport inflation as a result of rising fuel prices. Indeed, it was actually the item with the highest contribution to the increase in inflation last month.

However, the contribution of food inflation to the overall year-on-year inflation slowed down.

According to the figures from the Ghana Statistical Service, month-on-month inflation between September 2021 and October 2021 was 0.6%.

Food inflation was 11.0%, lower than that of last month (11.5%), whilst non-food inflation was also 11%, higher than September’s 9.9%.