Databank Group Research
ECONOMIC ANALYSIS
Leadership
DATE: March 16, 2009
Analysis & Outlook
GHANA
THE CONSUMER INFLATION REPORT
February: Inflation Further Increased To 20.3%
Ghana: Inflationary Trends (2007 - 2009)
25.0
Update: Average consumer prices for Ghana increased by 47.8 basis points
in February, 2009 to 20.3% (y/y). The recent increase marks the fourth 21.6
consecutive upturn in Ghana’s inflation rate since November, 2008; and is 20.0 20.4
19.9
the highest outturn since December, 2004.
15.0
%
The higher inflation outturn was facilitated by an increase of 117.7 basis
points in non-food inflation to 21.3%. Food inflation, however, declined by
47.9 basis points to 18.95% in February. The index of all sub-groups of the 10.0
country’s inflation basket increased, with the exception of the transport
index. The transport index shed 7.75 points in February to 405.65 points.
5.0
Jul
Feb
Jan
Jun
Oct
Mar
May
Nov
Dec
Sept
Aug
Apr
Average inflation at the regional level increased to 20.95% in February Headline - '07 Headline - '08
Annual Average - '08 Forecast - '09
from 20.0% during the previous month. Upper Region posted the highest
inflation rate at 28.6%, while the Volta Region registered the lowest
inflation rate at 14.4%.
National CPI Component Breakdown
Analysis & Outlook: Ghana’s inflation outturn for February indicated a 3%
8%
2%
softening of price increases across all sub-groups of the country’s inflation 3%
6%
basket compared to January. Inflation for February, however, remains to be 46%
4%
mainly driven by the less volatile items in the country’s inflation basket
such as the recreation and culture, as well as, the medical sub-groups. 8%
7%
2%
1%
1
The index for the recreation and medical sub-groups continued to register
the highest increases of 43.8 points and 23.4 points to 356.25 points and Fo o d and No n-A lco ho lic B everages A lco ho lic B everages, To bacco and Narco tics
Clo thing and Fo o twear Ho using, Water, Electricity, Gas and Others
454.8 points respectively in February. Inflation induced by less volatile Ho useho ld Equipment and Others Health
items could stress monetary policy and make anticipated reductions in Transpo rtatio n Co mmunicatio ns
Recreatio n and Culture Educatio n
interest rates difficult; as core inflation will increase substantially. In our Ho tels, Cafes and Restaurants M iscellaneo us Go o ds and Services
view, monetary policy easing will be difficult in the first half of the year.
Exchange rate depreciation will continue to put upward pressure on non- Ghana: 12 Month Pricing Trend
food inflation in the second quarter of the year. The cedi to dollar exchange
rate posted a year-to-date depreciation of 10.5% as at March 18, compared 25.0
to 1.5% for the same period in 2008. We do not anticipate significant
stability of the cedi against its major trading currencies in the second 20.0
quarter, which could push non-food inflation above 25% by June. This
combined with the seasonal pattern of food inflation could sustain the
% 15.0
current high inflation rate levels during the first half of the year.
10.0
March Inflation: Upward price adjustment for the recreation sub-group is
likely to continue in March, while the continuing depreciation of the cedi
will continue to firm up the index of the medical sub-group. The recent 5.0
Mar-08
May-08
Jun-08
Jul-08
Oct-08
Nov-08
Dec-08
Jan-09
Feb-09
Sep-08
Apr-08
Aug-08
decreases in petroleum prices will not significantly reduce non-food
inflation; though we expect the index of the transport sub-group to
continue to dip marginally. Consequently, we expect inflation for March to Combined Food Non-Food
increase by 126 basis points to 21.6%.
Disclaimer Policy: This Information has been compiled from sources we believe to be reliable but we do not hold ourselves responsible for its completeness or accuracy. It is not an offer to sell or a solicitation or an offer to buy securities. This firm and its affiliates and their officers and employees
may or may not have a beneficial interest in the securities mentioned herein. This firm and its affiliates may from time-to-time have a consulting relationship with a company being reported upon. This may involve the firm or the affiliates providing significant corporate finance services and acting as
the company's official or sponsoring broker. All opinions and estimates included in this report constitute our judgment as of that date and are subject to change without notice. Available only to persons having professional experience in matters relating to investment.
DATABANK ECONOMICS│ Analyst: Sampson Y. Akligoh sampson.akligoh@databankgroup.com