Inflation to inch up but at slow rate in 2022 – CEFIS predicts

The Center for Economics, Finance and Inequality Studies (CEFIS) has predicted that Ghana’s inflation is expected to inch up in the 2022 albeit at a slow rate.

“The increasing rate of the monetary policy rates over the recent quarters does not predict a decrease in price levels. This coupled with the not too pleasant macroeconomic variables all points to the fact that inflation would largely continue to rally up in the 2022 albeit at a slow rate”, it noted.

Furthermore, the Center said the “liquidity tightening on the international financial market, coupled with the uninspiring debt sustainability level for Ghana measured by the Debt to Gross Domestic Product ratio may mean that the government will have contract debt at a higher cost than before”.

This it said will inch up inflation, which will affect the Ghana cedi negatively.

Inflation went up to 12.2% in November, 2021, the highest since the rebasing of the Consumer Price Index was done in 2019, the Ghana Statistical Service stated.

Housing, Water and Electricity (20.5%) again topped the list of items in the inflation basket that contributed to the rate of increment.

Month-on-month inflation between October and November 2021 was however 1.4%.

Food inflation (13.1%) was higher than both last month food inflation (11.5%) and the average of the previous 12 months (10.4%).

Exports

The Center for Economics Finance and Inequality Studies also forecast export to fairly improve in 2022. This is against the backdrop that, the developed world gets a better strategy in managing or living with the Covid-19 virus as more people are vaccinated.

 “Although uncertainties exist about how to deal with new variants of Covid-19, the world economy has learnt a lot to deal with the pandemic. Total shut down as experience in the year 2020 is not likely in the short term”, it said.

The Center however pointed out that the demand for Ghanaian exports is expected to increase in the year 2022.

Imports

It also forecast imports to increase this year, a situation that can impact on the value of the cedi.

“We expect imports to increase in the year 2022, this notwithstanding the likely imposition of the controversial reversal of the Benchmark Value discount on selected imported goods. Aside imports will increase in the short to the medium term, as Ghana is yet to change its stand as an import-oriented economy.”