Consumer inflation in Ghana slowed to 53.6% year-over-year in January. It went down from a more than two-decade high of 54.1% in December, according to data released on Wednesday. This is the first time it has slowed since May 2021.
Capital outflows, a crushing debt-service burden, and rapid currency depreciation are wreaking havoc on government and household finances. Thereby, causing the country to confront its worst economic crisis in a generation.
In an effort to curb rising prices, Ghana’s central bank has increased lending rates by 13.5 percentage points since the beginning of last year.
Food prices increased to 61.0% in January, while non-food prices decreased to 47.9%. According to the Ghana Statistical Service, with food and non-alcoholic beverages contributing the most to overall consumer prices.
The difference between domestic and imported rising prices reduced in January compared to the previous month. With imported prices increasing by 62.5% and local prices increasing by 50%.
“This indicates that the difference in the exchange rate may have contributed to the marginal decline in inflation we observed in January 2023,” government statistician Samuel Kobina Annim told media. “However, we have yet to conduct a comprehensive analysis.”
The cedi was highly volatile in December, gaining approximately 50% against the dollar in a matter of days as the country attained a staff-level contract with the International Monetary Fund (IMF) on a $3 billion rescue package, following steep falls earlier in the year.
In January, the cedi reversed a portion of its December gains.
Tuesday, Ghana announced the completion of a long-delayed domestic debt exchange plan. However, the country must now restructure its external debts before the IMF executive board will approve the rescue package.
