Ghana: Inflation falls to an over two-year low in July
Inflation dropped to 21.0% in July, below June’s 22.8%. July’s reading represented the weakest inflation rate since March 2022 and undershot market analysts’ expectations. Looking at the details of the release, the moderation was primarily due to slower growth in prices for food and beverages. In addition, price pressures for transport increased at a softer pace.
Accordingly, the trend pointed down, with annual average inflation coming in at 26.7% in July (June: 28.4%).
Finally, consumer prices rose 2.05% from the previous month in July, below the 2.89% rise logged in June. July’s result marked the weakest reading since April.
Our panelists expect a high base of comparison and restrictive monetary policy to exert downward pressure on inflation through end-2024. That said, upside risks linger, including July’s hike in electricity and water tariffs, plus a notably weak cedi. Domestic food prices and international oil prices are key factors to monitor.
Overall in 2024, average inflation will roughly halve from 2023’s level, but still be more than double the upper bound of the Bank of Ghana’s 6.0–10.0% target band. Our Consensus is for inflation to decelerate to the upper bound of the target in 2026 and return within target in 2027.