Macroeconomic updateWest Africa

19 September 2022

Inflation Takes Bigger Bites

In brief

  • As the inflation marathon continues, everyone is obsessed with it, and why would they not be?


  • Following a rollercoaster week of inflation prints, whispers of a longer period of inflation leading to a possible extended recession are picking up in terms of volume and velocity, as inflation is either at double digits – or near double digits – in most countries.


  • For West Africa’s (WA’s) largest economies – Nigeria and Ghana -, inflation accelerated to new highs in August, leaving their monetary policy further unmoored.


  • With a hotter-than-expected United States (US) inflation print in August, the odds of a jumbo 75 basis points (bps) hike by the US Federal Reserve Bank (Fed) at this week’s meeting have been cemented, with more expected in the months to come.


  • The unfortunate reality is that the US Fed’s interest rate hike cycle will have asymmetrical spillover effects on WA’s economies, creating sticky and broad-based upward pressure on domestic consumer prices in months to come.


  • The end result will be more market volatility to deal with: from Nigeria’s “Broad” street to Ghana’s “High” street.