Ghana inflation hits record low, beating economists’ estimates

Ghana’s inflation rate dropped to a record low in May, falling below the middle of the central bank’s target range.

Consumer inflation slowed to 7.5% from 8.5% in April, Government Statistician Samuel Kobina Annim told reporters Wednesday in Accra, the capital. That’s the lowest rate since at least the start of 2013. The median of five economists’ estimates in a Bloomberg survey was 8.3%. Prices climbed 0.8% in the month.

The slowdown brought inflation below the midpoint of the official target band of 6% to 10% earlier than the central bank had projected. The monetary policy committee said last week the rate will be close to 8% by June.

At the same briefing, Governor Ernest Addison announced the panel’s unexpected move to cut its benchmark interest rate to the lowest in more than nine years to support the recovery of the economy, even as cost pressures from new taxes and a 13% rise in transport fares are yet to reflect in price data.

The inflation rate in the West African economy was above 11% in May, June and July last year at the peak of the pandemic and movement restrictions, creating a high base for comparing year-on-year price moves. That, and a relatively stable exchange rate, added to the drop in the headline number last month.

A “drop in the rate of inflation may make the Bank of Ghana feel vindicated in cutting the policy rate,” Courage Martey, an economist with Accra-based Databank Group, said by phone ahead of the release. “If subsequently the rate goes up, then we expect to see the policy rate on hold for the rest of the year.”