Ghana’s headline inflation rises to 23.5% in January

Ghana, a West African nation, has recently seen a slight uptick in its inflation rate for the month of January, climbing 20 basis points to reach 23.5 per cent. This increase marks a return to its upward trend after five consecutive months of slowdown. To delve into these economic figures, CNBC Africa spoke with John Gatsi, the Dean at the University of Cape Coast School of Business. Gatsi provided insights into the inflation data, potential monetary policy responses, and shed light on the recent cabinet reshuffle in the country. Discussing the inflation numbers, Gatsi mentioned that the slight increase was not entirely unexpected as it had been projected since November. Factors such as increased payments and the introduction of new taxes were anticipated to have a pass-through effect leading to an upward trajectory in the inflation rate. Although the exact magnitude was initially unclear, the recent data aligns with the predicted trend. Concerning the monetary policy response to this uptick in inflation, Gatsi highlighted that the five-month window of deceleration in inflation had closed, signaling a potential for further upward movement in the coming months. While a significant drop in inflation had previously resulted in a 100 basis point reduction in the policy rate, Gatsi expressed doubts about the likelihood of a rate cut if the inflation trend persists in February. He suggested that maintaining the current policy rate might be the most prudent approach until the inflation data for the upcoming months provides more clarity. Shifting focus to the recent cabinet reshuffle, Gatsi shared his perspective on the replacement of the finance minister, Ken Ofori-Atta, who is now being considered for the role of Senior Presidential Advisor on the Economy. Gatsi expressed concerns about the potential implications of this move, particularly in terms of financial oversight. He noted that Ofori-Atta had previously brought in private individuals from his data bank to the finance ministry, raising questions about their loyalties now that he may have a supervisory role over the country's finances. Gatsi emphasized that the unfolding details of this reshuffle would likely reveal more about its impact on Ghana's economic landscape. While acknowledging the constitutional prerogative of the president to reshuffle his ministers, Gatsi underscored that these changes might not immediately energize the economy, especially given that the budget had already been prepared and approved. He viewed the reshuffle as part of the political dynamics leading up to the 2024 elections in December, suggesting that the newly appointed officials would primarily carry out the president's approved budget plans. In conclusion, the interview with John Gatsi provided valuable insights into Ghana's economic challenges, including the uptick in inflation, potential monetary policy responses, and the implications of the recent ministerial reshuffle. As the country navigates these developments, the focus remains on sustaining economic stability and fostering growth amidst changing leadership dynamics and upcoming electoral processes.