The Bank of Ghana is very optimistic that headline inflation would return to its medium term target band of 8±2 percent during the second half of 2025.
According to the BoG, the latest forecast suggests that, inflation is likely to peak in the first quarter of 2023 and gradually ease thereafter. However, headline inflation is projected to remain above the upper until the second half of 2025.
Headline inflation jumped in the fourth quarter of 2022, driven by both demand and supply shocks.
Headline inflation has moved further up to 54.1 percent in December 2022, from 50.3 percent recorded in November 2022 but declined slightly to 53.6 percent t the end of January 2023.
The acceleration was largely explained by the lagged effects of the sharp currency depreciation amid food price pressures. Food and nonfood inflation went up significantly.
The continuous monetary policy tightening and the relative stability in the exchange rate in December 2022 led to some moderation in the pace of monthly price acceleration.
However, underlying inflationary pressures remain broadened and could be reinforced by additional shocks in the near-term with the announcement of new revenue measures in the 2023 Budget, additional exchange rate pressures, and upward adjustments in utilities and ex-pump prices.
