Reports that Ghana has the highest inflation rate in Africa have been debunked by the Governor of the Bank of Ghana (BoG), who declared that the country was behind Zambia.
Addressing a press briefing in Accra recently, Dr. Abdul Nahir Issahaku, Governor, BoG said, “It is not true that Ghana has the highest inflation rate in Africa. For example, inflation in Zambia was 21 percent in June while it was 18.4 percent in Ghana.”
Dr. Issahaku said although inflation remains elevated above the medium term target, the bank is confident that the current tight monetary policy stance, ongoing fiscal consolidation and the stability of the Cedi, would help steer inflation and inflation expectations to the desired path.
He said BoG is implementing policy in a way to bring inflation to its medium-term target of 8 percent, though it will tolerate inflation fluctuations of plus/minus 2 percentage points from the target’s midpoint.
Dr. Issahaku said that observed trends in inflation over the first half of 2016 have largely been influenced by increases in the prices of petroleum products, utility tariffs and food prices.
“Since most of these adjustments are cost push in nature, the current monetary policy stance of 26 percent is deemed appropriate, hence maintained,” he said.
Dr. Issahaku said Core inflation (CPI inflation excluding energy and utility prices) has stabilized in June, indicating some moderation in underlying inflation.
He said the latest consumer sentiment survey, conducted in June, reflects marginal uptick in inflation expectations based on the unanticipated increase in petroleum prices and the recurring energy supply challenges.
Dr. Issahaku said the recent price developments affirmed the bank’s earlier forecasts that inflation would peak in the first quarter of 2016 and is currently on a gradual descent.
He said the bank’s latest inflation forecast suggests a slight outward shift in the forecast horizon as increases in ex-pump prices of petroleum products slowed the pace of expected disinflation.
In the immediate outlook, the Governor said the expected disinflation process over the forecast horizon will remain anchored on monetary and fiscal policy tightness, stability in the local currency and expected slower food price increases with the onset of the harvest season.
“There are, however, risks to the inflation outlook. These include the extent to which petroleum product prices, transport costs and utility tariffs are adjusted upwards in the next two-quarters and the potential second round effects from such adjustments on prices,” he said.