The Economic Intelligence Unit (EIU) made the revelation in its latest country report.
Ghana’s inflation will rise by 11 per cent in 2019 due to the cedi’s weak performance
Ghana’s inflation rate is projected to rise by 11 per cent this year.
The rise is due to the weak performance of the Ghana cedi.
Although the inflation dropped last month, the Economist Intelligence Unit (EIU) is forecasting that the local currency’s weak performance will undo the work done by the central bank to tame inflation.
The Bank of Ghana last year depleted its reserves to shore up the cedi. The cedi was heavily supported with more than US$600million of international reserves to slow its depreciation to preserve the gains made by cutting the policy rate.
As of February 14, the cedi had depreciated by 3.5 per cent against the US dollar, compared to the 0.0026 per cent appreciation in the same period last year.
But the pressure on the cedi continues amid tightening of the US monetary policy combined with other domestic factors, making the dollar too strong for the local currency.
The report said, “We forecast that inflation will remain elevated in 2019, edging up to 11%, as the weaker cedi combined with modest growth in private consumption continues to drive increases in consumer prices.”
The average consumer prices, which dropped by 9 per cent last month, are also being projected to rise to 11 per cent this year owing to massive pressure on the cedi.
One dollar is currently equivalent to 5.26 Ghana cedis.
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