GhanaInflationInsightsMacroeconomic update

11 April 2024

Ghana’s March 2024 inflation: Just another bump on the road

In brief

  • Ghana’s annual headline inflation expectedly surged in March 2024, albeit marginally short of both our estimate and the market consensus for the month under review. Headline inflation quickened by 260bps to 25.8% year-on-year in March 2024, slightly lower than our projected 26.0% and the market consensus of 26.4%.
  • The re-acceleration in inflation was broad-based and culminated in a 260bps increase each for food inflation (29.6% y/y) and non-food inflation (22.6% y/y), reflected in a similar surge in the annual headline inflation. In our view, the upswing in the March 2024 annual inflation mostly reflects the impact of unfavourable movements in the CPI level against the comparable month of 2023. In addition to the unfavourable base effect, we observed renewed push from higher ex-pump petroleum prices with the pass-through of recent exchange rate depreciation starting to elevate price pressures.
  • Our estimations suggest that the 10.6% YTD depreciation of the Ghanaian Cedi could elevate Ghana’s headline inflation profile by between 80bps – 100bps at end 2024 as the FX pressures pass-through higher transport fares, utility tariffs, and imported items. In the March 2024 CPI data, transport inflation witnessed the steepest rise in its share of headline inflation, climbing from the 11th most influential item to the 8th position, with the planned hike in fares posing more upside. Consequently, we revise our FY2024 inflation forecast range to 16.9% ± 1.0pp (vs 16.1% ± 1.0pp in our FY2024 outlook report published late last year).
  • Despite the slightly elevated upside risk to inflation, our revised forecast maintains our expectation for a generally non-linear disinflation path in 2024 and view the March upsurge as a transitory bump on the disinflation journey. In 2Q2024, we expect a stronger favourable base effect to douse the aforementioned upward pressure while the recent liquidity tightening by the BOG eases the FX pressure with a tailwind for disinflation. We thus expect a decline in the April 2024 inflation to 24.6% y/y while the m/m rate ticks up to 1.4%.

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