GhanaInflationInsightsMacroeconomic update

9 May 2024

Ghana’s April 2024 inflation: From snail’s pace to cheetah’s sprint

In brief

  • Ghana’s headline CPI inflation for April 2024 declined by 80bps to 25.0% y/y, a tad slower than our forecast decline of 120bps for the month under review. On a month-on-month basis, inflation however went up by 100bps to 1.8% (vs our forecast increase of 60bps to 1.4%}, reflecting the pass-through of Cedi depreciation and higher fuel prices to domestic prices.
  • As expected, food inflation came in lower at 26.8% y/y, representing a 280bps slowdown compared to the annual rate in the prior month. However, non-food inflation unexpectedly quickened by 90bps to 23.5% y/y, albeit with less homogenous movements in its divisions. Notably, we observed uptick in inflation for only 4 out of the 12 reported divisions of non-food inflation with lower inflation for the remaining components.
  • We had anticipated that a re-emergence of favourable base effect will provide the tailwind for a faster disinflation in 2Q2024, beginning with the April 2024 print. While this was evident in both the food and non-food inflation data, the upsurge in energy prices amidst the intractable Cedi depreciation propelled inflation for a few heavily-weighted items of non-food inflation.
  • In May 2024, we expect a much faster decline in annual headline inflation as favourable base effect becomes more pronounced. While accounting for the upward pressure from sustained Cedi depreciation, higher ex-pump prices, and transport fare hikes, we forecast a 290bps decline in annual inflation to 22.1% in May 2024 due to the stronger favourable base effect. However, inflation could decline faster than our forecast if the upside risks do not feed through as feared.

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