Inflation projected to drop to 22.4% in January 2024 – Report

The country’s inflation is projected to drop to 22.4 percent in January 2024 from 23.4 percent recorded in December 2023.

This is according to research firm, IC Research who indicated this in their latest report on Ghana.

The firm attributed foreign exchange out-turn recorded in late December 2023 into early January 2024 which are expected to sustain price pressures in the inflation basket.

“Our forecast shows a modest decline in the annual inflation rate to 22.4% y/y in January 2024 as the improved FX out-turn in late December 2023 into early January 2024 sustains the lid on price pressures,” the firm projected.

It further added that local energy prices are expected to remain stable at the pumps on the back of downward bias in the January 2024 Consumer Price Index (CPI) window relative to the same period in 2023.

The research firm also predicts that a reduction in electricity tariffs implemented in December 2023 will help support the disinflation process in January 2024.

“We also anticipate the lagged impact of the lower electricity tariff implemented last month to sustain the disinflation in January 2024. However, the authorities have signalled the introduction of VAT [Value Added Tax] on residential use of electricity above lifeline consumers (>30kWh) with effect from January 1, 2024,” IC Research said.

The firm, however, pointed that the new taxes introduced in the 2024 budget of government will weaken the pace of disinflation in early 2024 while the Bank of Ghana is expected remain cautious on the timing of policy rate cuts.

MA/NOQ

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