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BusinessAfDB forecasts Ghana’s inflation at 20.9% for 2024, with reduction to 11.1%...

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AfDB forecasts Ghana’s inflation at 20.9% for 2024, with reduction to 11.1% in 2025

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Ghana’s inflation rate is projected to reach 20.9% by the end of 2024, according to the African Development Bank’s updated 2024 African Economic Outlook.

This figure is higher than the previously predicted 17.4%.

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This indicates that inflation will remain beyond the Bank of Ghana’s target range of 8%±2.

The AfDB cited several factors influencing this outlook.

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These include the impact of fiscal consolidation under the post-Covid Programme for Economic Growth, the ongoing effects of Russia’s invasion of Ukraine, restricted access to finance and foreign exchange, and global macroeconomic shocks.

However, the bank noted that prudent macroeconomic management policies could help mitigate these risks.

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Additionally, the Consumer Price Index is expected to decrease to 11.1% in 2025.

In the meantime, the average consumer price inflation across Africa is estimated to have risen by 3.0 percentage points to 17% in 2023, up from 14.0% in 2022.

East Africa recorded the highest inflation at 26.5% in 2023, with Sudan leading at 245.3%. West Africa follows with the second highest rate at 20.3%, with Sierra Leone and Ghana at the top.

The report highlighted that the increased inflation across Africa has undermined socioeconomic progress made prior to the COVID-19 pandemic.

The rise in inflation is due to a mix of factors, including elevated local food prices caused by drought-induced domestic supply shortages, excess liquidity from fiscal and monetary policy measures implemented during 2020–21 in response to the pandemic, and the impact of currency depreciation against a robust US dollar driven by high interest rates in the United States.

Inflation trends vary across different regions.

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