Inflation is expected to resume its downward trajectory in April 2024 after recording a sharp increase in March 2024, the highest in four months, GCB Capital has disclosed.
The research arm of the investment bank is projecting a 1.0% decline in headline inflation for April 2024 but still above the February 2024 number.
“We also flag fiscal risks and potential speculative FX [foreign exchange] pressures due to uncertainty as risks to the inflation outlook. Thus, while we expect favourable base effects, the implementation of the new CRR [Cash Reserves Requirement] directive and the continuously tight monetary policy stance to restore the disinflation process from April24, these outlined risk factors could moderate this anticipated pace of disinflation through quarter 2, 2024. Consequently, we see at least a 1.0% decline in headline inflation for April 2024 but still above the February 2024 number, driven largely by a sharp decline in food inflation”, it concluded.
Year-on-year inflation rose sharply in March 2024 to 25.8%, about 2600 basis points increase.
“While we see the March [2024] increase in inflation as transitory, the prevailing and emerging upside risks to the near-term inflation outlook remain pronounced. Amidst the lingering petroleum price pressures (largely due to exogenous factors), Brent crude oil may be headed for $100 per barrel”, it said.
“The resultant increases in ex-pump petroleum prices, possible upward adjustment to transport fares, and their second-round effects represent a significant risk to the inflation outlook”, it explained.
“We expect disinflation to resume from April 2024, but the prevailing upside risks to inflation could moderate the pace of disinflation in the coming months. While we see the March increase in inflation as transitory, the prevailing and emerging upside risks to the near-term inflation outlook remain pronounced”, it added.
Amidst the lingering petroleum price pressures (largely due to exogenous factors), GCB Capital said Brent crude oil may be headed for $100 per barrel.
The resultant increases in ex-pump petroleum prices, possible upward adjustment to transport fares, and their second-round effects, it said, represent a significant risk to the inflation outlook.
The exchange rate outlook, it added, also hinges on the limited foreign exchange supplies, with the passthrough effects of the recent spate of depreciation expected to filter through to inflation in the coming months.
Food and non-food inflation drove inflation up
Food and non-food inflation recorded sharp increases in inflation (a 2.6% increase apiece) to 29.6% and 22.6%, respectively in March 2024. This reflected the base effects and the prevailing price pressures.
Specifically, 12 out of the 13 divisions recorded higher rates of inflation year-on-year, dominated by transport (+4.4% year-on-year), education services (+4%), health (+3.9%), sport and recreation (+3.9%), among others.
The increase in inflation from the food basket was the first recorded in nine months.
Latest Stories
-
Paris 2024: Opening ceremony showcases grandiose celebration of French culture and diversity
3 hours -
How decline of Indian vultures led to 500,000 human deaths
4 hours -
Paris 2024: Ghana rocks ‘fabulous fugu’ at olympics opening ceremony
4 hours -
Trust Hospital faces financial strain with rising debt levels – Auditor-General’s report
5 hours -
Electrochem lease: Allocate portions of land to Songor people – Resident demand
5 hours -
82 widows receive financial aid from Chayil Foundation
5 hours -
The silent struggles: Female journalists grapple with Ghana’s high cost of living
5 hours -
BoG yet to make any payment to Service Ghana Auto Group
5 hours -
‘Crushed Young’: The Multimedia Group, JL Properties surprise accident victim’s family with fully-furnished apartment
6 hours -
Asante Kotoko needs structure that would outlive any administration – Opoku Nti
6 hours -
JoyNews exposé on Customs officials demanding bribes airs on July 29
7 hours -
JoyNews Impact Maker Awardee ships first consignment of honey from Kwahu Afram Plains
8 hours -
Joint committee under fire over report on salt mining lease granted Electrochem
8 hours -
Life Lounge with Edem Knight-Tay: Don’t be beaten the third time
8 hours -
Pro-NPP group launched to help ‘Break the 8’
8 hours