IC Securities has projected the rate of inflation to jump to 21.8% in August 2024.

“Although the sharper-than-expected deceleration in the July 2024 annual inflation significantly eases our concerns, we remain convinced that the August print will witness an upturn, stressing the need for caution in lower inflation and interest rate outlooks”, the investment firm said in its analysis.

“We opine that even a slight increase in the August 2024 CPI will nudge annual inflation,” it noted.

Additionally, the firm said it “foresees upside risk from the spill-over effect of the utility tariff hike in July 2024 although the relatively stable cedi could partly numb the impact.”

“Consequently, we forecast annual inflation at 21.8% (+90bps) while the m/m [month-on-month] rate declines to 0.5% in August 2024.”

Inflation for July declined by 190 basis points to 20.9% – the fourth consecutive fall.

IC Securities, however, noted: “The inflation outlook remains highly cautious amidst the lingering upside risk, especially with favourable base effect having been exhausted while election-related spending is expected in quarter 4, 2024.”

“However, we estimate that the latest disinflation has widened the real interest rates with the ex-post real policy rate at 8.1% in July and the ex-ante real policy rate likely at 7.2% in August 2024.”