Ghana’s February inflation spikes to 15.7%

Ghana's inflation has soared to 15.7 per cent in February, marking the second-highest rate since the rebasing of the Consumer Price Index (CPI) and inflation in 2019. Courage Boti, an Economist at Databank, recently discussed the concerning trend in an interview with CNBC Africa. Boti highlighted that the significant increase in inflation is driven by several factors, including rising international crude oil prices and food supply shocks in the local market. The economic challenges facing Ghana have been exacerbated by the ongoing tensions between Russia and Ukraine, leading to uncertainties in global commodity markets. As a result, Ghana's policymakers face tough decisions on monetary policy to curb inflation and stabilize the economy. Boti projected a possible 200 basis point hike in March and an additional 100 basis point hike in May to address the demand-side pressures on inflation. He also emphasized the importance of structural interventions to tackle the supply-side shocks affecting food supplies and other key sectors of the economy. Additionally, Boti addressed the recent ratings downgrade by Fitch and Moody's and its impact on Ghana's economy. He noted that the downgrade was partly due to concerns about Ghana's fiscal position and debt levels. In response to the downgrade, the Ghanaian government implemented measures to reduce expenditure and restore investor confidence. Boti stressed the need for sustained prudent management of revenue growth and expenditure containment to regain credibility in the eyes of investors. Looking ahead, Boti suggested that by the mid-year budget review in July, Ghana could demonstrate progress in managing its fiscal challenges and stabilizing the economy. Overall, Ghana faces a complex economic landscape marked by high inflation, external uncertainties, and the need for bold policy decisions to navigate through the crisis.