The Bank of Ghana is optimistic inflation will return to the medium-term target band of 8% +/-2 in the outlook.

It believes inflation will return to the central target by the second quarter of next year.

Inflation is expected to take a nosedive in the coming months due to receding domestic aggregate demand pressures, and a well-calibrated monetary policy stance.

The Central Bank emphasised that subdued global inflation and well anchored inflation expectations are also some of the factors that should help push inflation towards the medium-term target band in the outlook.

The Central Bank’s survey of inflation expectations pointed to heightened inflation expectations within the period of May to August 2020 which was mainly attributed to the impact of the two panic buying episodes on price expectations.

But Inflation went down to 10.4% in September, indicating a slowdown in increment in price of goods and services within the period.

Prices of food stuffs were the major contributor to the marginal fall in inflation. 

Going forward, the Central Bank says key risks to inflation include the second-round effects of the rise in transport prices and food prices which has slowed the disinflation process.

However, the potential decline in food prices during the harvest season could possibly mute the second-round effects.

IMF forecasts 11.6% inflation for 2020

The International Monetary Fund projected an end-year inflation rate of 11.6% for Ghana, according to its World Economic Outlook Report.

It however forecast a single digit inflation of 8.7% for 2021.

Its single digit inflation projection for the country last year was achieved.

September 2020 Inflation

Inflation fell marginally by 0.1% in September 2020 to record a rate of 10.4%.

According to figures from the Ghana Statistical Service, the slight drop was influenced by reduction in some prices of food stuffs.

Month-on-month inflation between August 2020 and September 2020 was however -0.2%. Last month, the month-on-month inflation was also negative (- 0.4%).