GCB Capital, a leading investment bank in Ghana, has predicted that consumer price inflation will start to decline significantly from April 2023 onwards, as the disinflation process continues through the first quarter of the year.
Inflation in Ghana, as stated by GCB Capital, is expected to fall for the fourth consecutive time in April 2023, extending the disinflation process that began earlier in the year.
The disinflationary trend was credited to the sharp correction of the cedi, which has reduced gasoline prices at the pump and lessened pricing pressures across both the food and non-food baskets.
According to GCB Capital, the deflation trend for the month-on-month headline, food, and non-food inflation will continue in April 2023.
“We expect these favourable price effects and the favourable base pull to trigger another sharp drop in headline inflation to around the 36% level, all things equal, with the deflation trend for the month-on-month headline, food, and non-food inflation also set to continue in April 2023.”
GCB Capital
Furthermore, GCB Capital anticipates that core inflation will ease alongside the headline number as the pass-through effects of the volatile items in the inflation basket wane.
However, the bank warned that the price effects of the new revenue measures, which took effect on May 1, 2023, could stoke some inflationary pressures as pricing agents adjust general price levels to reflect the new and revised taxes.
GCB Forecasts Policy Rate To Be 29.5%
GCB Capital is optimistic that the favorable base pull and reducing pricing pressures from the volatile products would reduce the impact of the new revenue measures and maintain the deflationary trend .
The Monetary Policy Committee is therefore anticipated by the investment bank to maintain the policy rate at 29.5% at its subsequent meeting later in May 2023.
According to GCB Capital, the declining trend in inflation will exert some downward pressure on nominal money market yields once the International Monetary Fund (IMF) deal is secured.
The IMF deal is a critical component of Ghana’s economic strategy, and it is expected to provide the country with financial support to help address its fiscal challenges.
GCB Capital’s outlook for inflation in Ghana is positive, as the disinflationary trend is set to continue in April 2023.
While there may be some inflationary pressures brought on by the new revenue measures, the disinflationary trend is projected to be sustained due to the favorable base pull and lessening pricing pressures from the volatile goods.
If this pattern continues, nominal money market yields are anticipated to experience downward pressure, supporting Ghana’s economic recovery even more.
