- Ghana’s inflation rate declined in January for the first time since May 2022.
- This is some measure of good news as the country is currently faced with one of its worst economic crises in over 2 decades.
- The country’s inflation fell from 54.1% in December to 53.6% in January.
Ghana’s consumer inflation fell marginally in January to 53.6% year on year, down from a more than two-decade high of 54.1% the previous month, according to statistics released on Wednesday. This is the first month that inflation has slowed since May 2021.
The country is facing its worst economic crisis in a generation as capital outflows, a crushing debt-service load, and fast currency devaluation wreak havoc on government and individual budgets. This report is courtesy of Reuters, a British news agency.
Since early last year, Ghana’s central bank has raised lending rates by 13.5 percentage points to curb price increases. According to Ghana Statistical Service data, food inflation increased slightly to 61.0% in January, while non-food inflation decreased to 47.9%, with food and non-alcoholic drinks contributing the most to overall inflation.
The gap between domestic and imported inflation reduced in January, with prices rising 62.5% for imported commodities and 50.0% for domestically manufactured goods.
According to the Ghanaian government statistician, Samuel Kobina Annim’s assessment, the fluctuating currency rate may have contributed to the slight decline in inflation seen in the period under review.
The statistician stated, “this suggests that the variation in the exchange rate may have contributed to the marginal drop in inflation we saw in January 2023, though we are yet to do a robust analysis.”
The cedi was very volatile in December, rising about 50% versus the dollar in a couple of days around the time the country secured a staff-level agreement with the International Monetary Fund (IMF) on a $3 billion rescue plan, following severe declines earlier in the year.
This, however, came a few days after the Cedi had made a huge recovery against the dollar, giving it the position of best-improved currency in the world, after it gained 61% of its value against major foreign trading currencies.
Ghana announced the completion of a long-delayed internal debt swap plan on Tuesday, but it must now restructure its foreign obligations before the IMF executive board approves the rescue package.
