The much-anticipated drop in Ghana’s monetary policy rate may be delayed, as investment firm IC Securities predicts a rise in inflation for August 2024.
The firm’s research unit projects that inflation will increase to 21.8% in August, primarily due to an unfavorable base effect, despite recent positive trends in the country’s inflation outlook. This projection marks a shift from the downward trend observed since April.
Inflation eased to 40.1% in August last year, below July’s 43.1%. At the time, August 2023’s inflation represented the weakest inflation rate since September 2022.
IC Securities’ analysis indicates that while the sharp deceleration in July this year brought some relief, inflation is likely to climb again in August 2024. “Although the sharper-than-expected deceleration in the July 2024 annual inflation significantly eases our concerns, we remain convinced that the August print will witness an upturn,” the firm stated. They emphasized the importance of continued vigilance as the inflation landscape evolves, cautioning against premature expectations of lower inflation and interest rates.
Globally, there has been a general easing of inflation, prompting many countries to lower their policy rates. However, Ghana’s policy rate has remained unchanged at 29% for about seven months.
The expected rise in inflation comes at a time when many Ghanaians are already struggling with high living costs, driven by fluctuating prices of essential goods and services. While month-on-month inflation may ease slightly, the projected annual inflation rate of 21.8% suggests that economic pressure on consumers could persist in the coming months. This creates a challenging scenario for policymakers and economic planners aiming to stabilize the country’s financial climate.
IC Securities’ forecast adds to growing concerns about Ghana’s economic trajectory in the second half of 2024. Economists and financial experts have warned that ongoing challenges, including exchange rate fluctuations and global market uncertainties, may continue to influence inflationary trends.
