The Bank of Ghana (BoG) is projecting a downward trend of inflation until the end of the 2025 barring any unanticipated shocks.
However, it anticipates the upper band of 8±2 to remain percent during the same period. This means, inflation will remain above 10 percent till the next two years.
These projections were captured in the Bank of Ghana’s Monetary Policy Report for May 2023.
“The latest forecasts suggest a disinflationary path in the horizon, supported by the monetary policy tightening, relative exchange rate stability, and some favourable base drift effects.”
“Headline inflation is projected to gradually trend downwards but remain above the upper band of 8±2 percent until the end of 2025, barring any unanticipated shocks. Risks to the inflation outlook are fairly tilted to the downside”, the BoG said.
Inflation for May 2023 experienced a marginal increase after four consecutive decreases, rising from 41.2% in April 2023 to 42.2%.
According to the report, headline inflation has declined significantly by 12.9 percent between December 2022 and April 2023.
The percentage of items in the Consumer Price Index (CPI) basket with inflation exceeding 50 percent is receding, an indication of a return to the disinflationary path.
Core inflation has also trended downwards, further supporting the disinflation process. Several factors accounted for these favourable price developments, including the tight monetary policy, relative stability of the local currency, and the decline in ex-pump petroleum prices.
Additionally, the IMF US$3 billion Extended Credit Facility Arrangement for Ghana, is expected to provide the much-needed anchor to reinforce the disinflation process, restore fiscal and debt sustainability, and reset the economy on the path of recovery.