Ghana’s annual inflation slowed to a more than two-year low in June, potentially putting an interest-rate cut on the table, though food price gains accelerated.
Consumer prices rose 22.8 per cent, their slowest pace since March 2022, from 23.1 per cent in May, Government Statistician Samuel Kobina Annim told reporters in the capital, Accra, on Wednesday. The median of three economists’ estimates in a Bloomberg survey was 22.5 per cent.
“The recent stabilization of the cedi and food staples coming to market after harvest should allow for inflation to fall further toward 20% in coming months,” Mark Bohlund, a senior credit research analyst at REDD Intelligence, said by email before the release.
“Such a slowing in inflationary momentum should make the central bank more confident to restart its monetary easing this month, albeit with another relatively small 100 basis point cut,” he said.
After a rate cut in January, the central bank’s monetary policy committee has kept its key interest rate unchanged at 29 per cent to support the cedi and ensure that its depreciation doesn’t become embedded into inflation expectations and the pricing behaviour of businesses. It will give its next rate decision on July 29.
Ghana dollar bonds maturing in 2032 rose 0.18 cents to 51.1 cents on the dollar at 11:18 a.m. in London. The Cedi traded relatively unchanged at 15.4 per dollar.
The cedi has depreciated 0.6 per cent this month against the dollar, compared with 3.7 per cent in June, and 7.3 per cent in May. Market sentiment toward the nation has improved after its official creditors approved a deal clinched with eurobond holders in June to revamp $13 billion of dollar bonds.
Ghana embarked on a debt reorganization program to qualify for a $3 billion extended credit facility program with the International Monetary Fund.
The consent from the official creditor committee paves the way for the West African nation to round up the process of restructuring by issuing new bonds to investors to replace the existing ones.
The country’s target is to begin the debt exchange program this month and conclude it by end-September.
The main driver of the deceleration in inflation was non-food prices growth. It slowed to 21.6 per cent in June from 23.6 per cent a month earlier, whereas food inflation remained sticky. It accelerated to 24 per cent from 22.6 per cent in May. Prices rose 2.9 per cent in the month.
–Bloomberg
