Although consumer inflation over past three months has remained flat at 7.8 percent up to March 2020, Bank of Ghana has raised concerns of upside risk to the consumer inflation outlook.

This has been attributed to both fiscal pressures as well as the current global supply disruptions.


The central bank in its latest Monetary Policy Report, dated March 2020, indicates that the risks to inflation are underscored by the global supply disruptions on account of COVID-19, which will most like limit imports and complicate the domestic process of importing intermediate and consumption goods, moving forward.

The central bank’s outlook also anticipates that the implementation of governments stimulus packages in order to dampen the economic and social implications of COVId-19, would generate fiscal pressures which are expected to emerge over the medium-term.



Another key upside risk to inflation is the continuous depreciation of the cedi, since the beginning of March 2020, However, this is partially offset by lower fuel and food prices.

Inflation is expected to rise but remain below the upper band of the central bank target of 8 percent plus or minus two percent, which translates to a ceiling of 10 percent.

Nevertheless, declining crude oil prices on account of weak global demand, and accommodative monetary policy by central banks are expected to dampen inflationary pressures in the outlook.

According to the BoG’s forecast, risks to the inflation outlook are broadly balanced over the forecast horizon.

It further states that the main downside pressures on the inflation outlook are reduction in ex-pump prices of petroleum products, and dampened underlying inflation as both core inflation and weighted inflation expectations trend downwards.

The Consumer Price Index (CPI) measures proportionate changes in the prices of a fixed basket of goods and services that households in Ghana consume.


Inflation Trends

For a fifth consecutive month in March 2020, inflation for locally produced goods has been growing faster than inflation for imported goods, although Ghana is an import dependent country.

In March 2020, the Ghanaian market saw a continued faster increase of prices of locally produced at 8.8 percent than of imported goods at 5.6 percent. This was the highest rate of local goods inflation and the lowest rate of imported goods inflation since the rebasing of the CPI computations in August 2019.

Inflation for imported goods declined from 8.9 percent in August 2019 to 7.5 percent in November 2019, when inflation for imported goods was lower than locally produced goods. The trend for imported goods continued to 6.1 percent in December 2019 and further declined to 5.8 million in January 2020. However, in February 2020, the rate inched upwards slightly to 5.9 percent but remained lower than local goods, which was at 8.6 percent.