Double whammy
After five months of decline, Ghana’s inflation rose slightly to 23.5% in January 2024, with non-food items like housing, clothing and…
After five months of decline, Ghana’s inflation rose slightly to 23.5% in January 2024, with non-food items like housing, clothing and transport driving the increase. Non-food inflation reached 20.5%, up from 18.7% in December 2023, while food inflation decreased marginally to 27.1%. Meanwhile, the Ghana Cocoa Board (Cocobod) plans to use part of a $200 million World Bank loan to rehabilitate cocoa plantations affected by the swollen shoot virus, which has devastated about 500,000 hectares of farmland. Output declined to 600,000 metric tons in 2023 due to various factors, including the virus, ageing plantations, illegal mining, and smuggling.
Ghana continues to grapple with price hikes as the year-on-year inflation rate for January 2024 sees a marginal rise, hitting 23.5%, making it one of the Sub-Saharan African countries experiencing the highest inflation. Within the ECOWAS bloc, both Ghana and its economic counterpart, Nigeria, share inflation rates above 20%, with Nigeria’s nearing 30%. In contrast, neighbouring countries like Ivory Coast, Togo and Burkina Faso boast single-digit inflation rates. It is noteworthy that Ghana’s inflation has not touched single digits for almost four years, with the last instance occurring in March during a lockdown. Despite receiving close to $2 billion from the IMF, World Bank and the African Development Bank within the past year and a half under the Extended Credit Facility Programme, Ghana is struggling to maintain healthy international reserves. The country’s Gross International Reserves have plummeted from a historical peak of $11 billion, providing almost six months of import cover, to $5.9 billion as of January 2024, affording less than three months of import cover. This decline has intensified pressure on the local currency, the cedi, leading to its depreciation against major trading currencies such as the US dollar. The exchange rate fluctuations impact import duties and other costs, contributing to the rising domestic prices of imported goods. Food inflation stands at 27.1%, persistently rising for four consecutive months and surpassing the overall inflation rate of 23.5%. Ongoing border restrictions in Niger, Mali, and Burkina Faso continue to impact the prices of essential farm produce like onions and tomatoes imported into Ghana. Notably, key ingredients for common household meals, including jollof, banku and fufu, have recorded inflation rates above 40% in January. With a substantial weight of 1.2 in determining national inflation, fresh tomatoes have surged by 52.3%. Other crucial ingredients like cassava, fish, carrots, and garden eggs have inflation rates twice the national average. With the December 2024 general election approaching, Ghanaian voters prioritise key issues such as price stability, a resilient currency, and tackling unemployment. Addressing these concerns as the country faces economic headwinds has become paramount for the electorate.