Ghana inflation slows to 20.9% y/y in July 2024

In Ghana, the inflation rate has continued to decelerate for the fourth consecutive month since April 2024. According to data from the Ghana Statistical Service, inflation dropped by 190 basis points to 20.9 percent year-on-year, driven by decreases in both food and non-food inflation. Benjamin Boachie, Chief Economist at Secondstax, recently discussed the inflation trajectory and strategies to mitigate potential risks. Boachie highlighted that while the current inflation rate of 20.9 percent remains significantly above the target range, the progress made from a high of over 50 percent earlier is commendable. He cautioned against aggressive rate cuts by the central bank but emphasized the importance of maintaining a restrictive policy stance to sustain the downward trend. The interview delved into the feasibility of achieving a 15 percent inflation target by the end of the year, with Boachie expressing optimism if prudent fiscal and monetary measures are upheld. The discussion also addressed the risks posed by foreign exchange pressures, rising utility costs, and fuel prices, underscoring the need for continuous reassurance to investors, both local and foreign. Boachie indicated that investor confidence is bolstered by Ghana's adherence to IMF guidelines and stringent monetary policies, which mitigate the risk of inflation escalation. Looking ahead to the next Monetary Policy Committee (MPC) meeting, the importance of maintaining a restrictive monetary policy to curb inflation was emphasized. Boachie advised against premature rate cuts given the current inflation rate of 20.9 percent. Reflecting on global economic trends, Boachie compared Ghana's inflation trajectory to that of the United States and the United Kingdom, highlighting the importance of a cautious approach to monetary policy. In conclusion, the interview underscored the need for Ghana to sustain its current trajectory, leveraging prudent fiscal and monetary strategies to achieve price stability and attract long-term investments. Despite uncertainties surrounding the upcoming elections in December, Boachie expressed confidence in Ghana's near-term economic outlook, emphasizing the importance of policy continuity and stability.