Ghana’s inflation drops to 40% in August driven by food prices

Driven by food prices, Ghana’s inflation rate dropped to 40.1% in August from 43.1% in July—a 10-month low. 

Data from Ghana’s Statistical Services (GSS) showed that headline inflation for August dropped to 40.1%. It is a 10-month low after July’s inflation figure reached a four-month high of 43.1%. According to Bloomberg, Ghanaian statistician Samuel Kobina Annim said it was the slowest rate recorded since last October.

Just like July’s uptick, the slowdown in August was again driven primarily by food prices. Per the data from the GSS, food inflation fell from 55% in July to 51.9% in August. This drop is tied to the difference in the inflation for locally produced items and inflation for imported items. On the other hand, non-food inflation grew from 30.9% in July to 33.8% in August. 

Ghana’s Central Bank has so far focused on keeping inflation under control. In July, the central bank raised the key lending rate to 30% to combat surging inflation which stood at 42.5% at the time.  Central Bank governor Ernest Addison had said the bank will continue to raise the lending rates policy until the desired inflation level is achieved. Bloomberg reports that the monetary policy committee will announce a new rate on September 25.

Ghana grapples with a disturbing financial crisis. The Financial Times reported that the country’s public debt is almost as large as its gross domestic product (GDP). In May, Ghana secured a $3 billion bailout from the International Monetary Fund (IMF). According to a World Bank report, Ghana’s economic growth is projected to slow down to 1.5% this year and remain depressed in 2024 at 2.8% but the economy is expected to recover to its potential growth by 2025. The report recommended that the Ghanaian government in addition to managing the immediate macroeconomic crisis, implement structural reforms including collecting more domestic revenue, implementing tighter expenditure controls, and addressing the energy sector shortfalls.

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