Inflation is expected to fall to 21% in May 2024 and end the year at around 17%
GCB Capital attributes this decline to base effects
However, GCB Capital expresses concern about the anticipated pass-through of the current spate of cedi depreciation and its lagged impact, citing second-round effects as an upside risk to the near-term outlook
The company notes that multiple upward adjustments in ex-pump petroleum prices, resulting in transport fare hikes, and the full pass-through to general prices is yet to come, posing a risk to near-term inflation.
The Monetary Policy Committee (MPC) maintained a tight monetary policy stance in response to emerging upside risks to inflation from currency pressures, recent transport fare hikes, and their potential lagged impact on inflation.
The MPC’s latest forecasts show a slightly elevated inflation profile, attributed to the recent spate of cedi depreciation and transport fare hikes.
The Committee expects the disinflation process to continue broadly, projecting headline inflation to end in 2024 within the monetary policy consultative clause of 13% to 17%.
GCB Capital concludes that the decision is consistent with their expectations and the consensus market view, as the upside risks to inflation are evident.
