Consumer inflation dropped by 1.8 percentage points to 8.5 percent in April, driven by a large drop in food inflation, which fell by 4.3 percentage points to 6.5 percent in the month, according to data from the Ghana Statistical Service.

Although this indicates that the COVID-induced price hikes from last year continue to ease off, inflation on a monthly basis increased from 0.9 percent in March to 1.5 percent in April, the data showed.

“April 2021 inflation was 8.5 percent. This shows that the effect of price hikes recorded at the onset of COVID-19 is waning, and inflation is almost at pre-Covid rates,” said Government Statistician Prof. Samuel Kobina Annim.

Despite the fall, market analysts have predicted that beyond April, upside price pressures could cause some modest increases in inflation, before a slowdown is seen again in August and September. The expected increases are based on the recent tax increases, higher fuel costs, and higher transport fares.

It is anticipated, however, that the food harvest in August and September could bring down inflation for the period.

In contrast to food inflation, non-food year-on-year inflation went up in April compared to March, from 10 percent to 10.2 percent.

Analysts have said the central bank’s monetary policy committee is likely to keep its benchmark policy lending rate at 14.5 percent this month and through the rest of the year given the upside risks to inflation beyond April.

According to Courage Martey, a senior analyst with Databank, the asset management company, a favourable inflation would allow Bank oo Ghana to keep policy rate unchanged.

“Against this backdrop, I expect the MPC to leave the policy rate unchanged at 14.5 percent to observe the price dynamics between May and July 2021,” he predicted.

The Bank of Ghana’s current forecast is for headline inflation to return to the target band of 8–10 percent in the second quarter of 2021. However, this could soon be revised in view of recent tax and fuel cost increases.