GhanaInflationInsightsMacroeconomic update

12 October 2023


In brief

  • Headline inflation declined by 200bps to 38.1% y/y in September 2023, a tad below our expectation of 38.4% (market expectation: 37.3%). On a month-on-month basis, headline inflation however edged up to 1.9% m/m in September 2023 (vs our forecast of 2.1% m/m) from a deflation of 0.2% m/m in August 2023.
  • On an annual basis, we observed a decline in food and non-food inflation rates to 49.4% y/y (-250bps m/m) and 29.3% y/y (-160bps m/m), respectively. We attribute the drop in the annual inflation rate partly to favourable base effect and the impact of cereal harvest while the uptick in the monthly inflation partly reflects the recent hike in utility tariffs.


  • We recalled that the authorities commenced a quarterly review of utility tariffs in September 2022 with jumbo hikes of 27.2% for electricity and 21.6% for water. With a modest hike of 4.2% for electricity and 1.2% for water in September 2023, the annual comparative changes triggered a favourable base effect in the CPI for utilities, resulting in the sharp disinflation observed for this division.


  • A further disaggregation of the CPI data suggests a decline in core inflation in lockstep with the headline rate below 40.0%. However, we believe the core measure (overall CPI excl. energy & utilities) likely remained above the headline inflation, suggesting lingering underlying price pressures which require continued tight policy stance.


  • Under the IMF programme, the authorities had a central target rate of 40.6% ± 3.0pp (inner band) for September 2023. Impressively, the outturn of 38.1% pushed Ghana’s September 2023 inflation towards the lower limit of the inner band and raises the prospect for achieving the December central target of 29.4% ± 2.0pp (inner band). In October 2023, we forecast annual inflation at 37.6% y/y and the month-on-month rate at 2.3% against the backdrop of favourable base effect partly offset by lagged impact of utility tariff hike, higher energy prices, and emerging FX pressures.

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