Ghana’s annual inflation rate unexpectedly fell to a 29-month low in August, increasing the chance of an interest-rate cut when policymakers announce their decision on September 30, 2024.

Consumer prices rose 20.4% from 20.9% in July, Government Statistician Samuel Kobina Annim told reporters in the capital, Accra, on Wednesday. Only one of six economists expected a deceleration in a Bloomberg survey whose median forecast was 22.8%.

The biggest drivers of the slowdown were deflation in milk, oils and fats and fruits and nuts, Annim said.

Food price growth eased to 19.1% from 21.5% in July and non-food inflation quickened to 21.5% in August from 20.5%. Prices fell 0.7% in the month.

The slowdown and relative stability in the currency may persuade the central bank’s monetary policy committee to cut interest rates when it meets later this month. The cedi has traded almost 1% lower against the dollar in the past month, after an almost 24% slump this year.

“Looking past the August inflation number, the recent fall in the Brent crude price and the stability of the cedi strengthens our forecast that the annual inflation number will fall below 20% in September,” Mark Bohlund, a senior credit research analyst with REDD Intelligence, said ahead of the release “My assumption is that the Bank of Ghana will follow a path of caution and announce a 100 basis points rate cut at the end of September, focusing more on reducing inflation expectations for 2025 rather than meeting its end-2024 target,” he said.

The central bank had forecast inflation at between 13% to 17% by year end.

After a rate cut in January, the MPC has kept the key interest rate unchanged at 29% to support the cedi and ensure that its depreciation doesn’t become embedded into inflation expectations and the pricing behavior of businesses.

Ghana dollar bonds maturing in 2032 rose 0.2 cent to 52.36 cents on the dollar at 11:38 a.m. in London. The cedi weakened 0.1% to 15.67 per dollar.