The Economist Intelligence Unit (EIU) has reconfirmed its forecast of an average end-year inflation rate of 38.1% for Ghana in 2023.

This indicates that prices of goods and services will continue to remain high throughout the year.

The UK-based organisation attributes the upward pressure on domestic prices partially to the pass-through effects of newly introduced taxes and increased utility tariffs.

Despite a slowdown in monthly inflation for most of the period, the EIU expects inflation to further rise on average in 2023.

In May 2023, inflation marginally increased to 42.2% after two consecutive months of decline.

This was primarily driven by a surge in food inflation, which rose to 51.8% from the 48.7% recorded in April.

On a global scale, the EIU predicts a slight easing of inflation from 9.2% in 2022 to 7.1% in 2023.

The organisation, meanwhile, pointed to high global commodity prices, ongoing disruptions in the supply chain due to the Ukraine conflict, and the persistent strength of the US dollar in some regions as factors that will keep annual inflation well above 2019 levels.

However, the EIU anticipated a loss of momentum in inflation as global demand softens and commodity prices start to ease back from their peak levels in 2022.

Central Banks are expected to maintain an aggressive policy stance

Central banks are expected to maintain an aggressive policy stance in their efforts to control inflation, even as global economic growth slows down.

Interest rates in most major economies are predicted to reach their peak by mid-2023 and remain unchanged until 2024.

The EIU further warned of various risks that could challenge its forecasts for the global economy.

These include an escalation of the war in Ukraine, social unrest triggered by high inflation, increased tensions surrounding Taiwan, financial contagion following the collapse of three US regional banks since March, turmoil at Swiss banking giant Credit Suisse, and extreme weather events compounded by the anticipated resurgence of the El Niño phenomenon later this year, which could further fuel global inflation.

Meanwhile, contrary to market expectations, inflation increased in May, coming in at 42.2% from April’s 41.1%. The acceleration was largely driven by rising prices for food and beverages as well as new taxes. That said, prices pressures for transport and housing softened. Overall, inflation for imported items remained higher than that for locally produced goods.

Consumer prices increased a seasonally adjusted 4.81% over the previous month in May, following the 2.34% rise logged in April. May’s jump marked the highest reading since November 2022.