The Economist Intelligence Unit (EIU) has maintained its projection of an average inflation rate of 38.1% for Ghana by the end of 2023. This means that prices of goods and services in the country will remain high throughout the year.
The UK-based organization attributes the upward domestic price pressures to the introduction of new taxes and an increase in utility tariffs, which are expected to have pass-through effects on inflation.
The EIU states, “We expect inflation to rise further on average in 2023, to 38.1%, despite a slowdown in monthly inflation over most of the period.”
In May 2023, inflation in Ghana increased slightly to 42.2% after two consecutive months of decline. This was driven by a surge in food inflation, which rose to 51.8% from 48.7% in April.
On a global scale, the EIU predicts that inflation will ease slightly from 9.2% in 2022 to 7.1% in 2023. It attributes this to high global commodity prices, supply chain disruptions resulting from the situation in Ukraine, and the strength of the US dollar in some regions. However, the EIU expects inflation to lose momentum as global demand softens and commodity prices start to decline from their peak in 2022. Central banks are expected to maintain an aggressive policy stance to control inflation, while interest rates in major economies are projected to peak by mid-2023 and remain unchanged until 2024.
The EIU also highlights several potential risks to the global economy that could impact its forecasts. These include an escalation of the war in Ukraine, social unrest arising from high inflation, tensions around Taiwan, financial contagion following the collapse of three US regional banks and turmoil at Credit Suisse, and extreme weather events exacerbated by the likely resurgence of the El Niño phenomenon later this year, which could further fuel global inflation.
Source: Norvanreports