GhanaInflationInsightsMacroeconomic update

14 September 2023

Ghana’s August 2023 Inflation: Coming In From The Cold

In brief

  • Following three consecutive months of upsurge, annual headline inflation came in lower and refreshing in August 2023, boosting our optimism for cooling price pressures in the months ahead. Headline inflation unexpectedly declined by 300bps to 40.1% y/y in August 2023, dragged down by a slide in food and non-food inflation rates.
  • Food price inflation provided the major source of cheer, declining by 310bps to 51.9% y/y while Non-food inflation added further downward momentum with a 290bps unexpected decline to 30.9% y/y in August 2023
  • As anticipated in our inflation note for June 2023 – Feeling the Pain Points – we believe the resumption of artisanal fishing supported the supply of fish stock in August 2023 after the closed season ended on 31 July 2023. We also believe the soothing effects of an improved exchange rate combined with the onset of crops and fish harvest as well as the diminishing impact of recent taxes dragged down inflation in August 2023.
  • Global energy prices have endured renewed upward pressure in the past couple of months, seemingly closing the door on a quick return to disinflation from this quarter. However, we believe the ongoing harvest amidst a stable FX has opened another door to disinflation from this point onwards, barring unanticipated price shocks.
  • We believe the positive FX sentiments will limit the potential upside risk induced by higher energy prices and utility tariff hike in the September window amidst continued decline in food inflation. Consequently, we forecast annual headline inflation at 38.4% y/y in September 2023 and the month-on-month inflation at 2.1%. In 4Q2023, we expect the return of favourable base effect on the back of a stable FX to quicken the pace of disinflation in the annual headline inflation rate, potentially closing between 29.7% and 31.7% by FY2023.

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