In a concerning economic trend, Ghana’s inflation rate has surged to 23.5% in January 2024, marking a significant challenge for the nation amidst a backdrop of rising prices and economic instability.
This rate places Ghana among the Sub-Saharan African countries grappling with soaring inflation rates, with its current figure nearly three times higher than the combined rates of neighboring Ivory Coast, Togo, and Burkina Faso.
Within the ECOWAS bloc, both Ghana and Nigeria, its economic counterpart, share inflation rates exceeding 20%, with Nigeria’s inflation nearing 30%.
In stark contrast, neighboring nations such as Ivory Coast, Togo, and Burkina Faso maintain single-digit inflation rates. Burkina Faso, despite its current military leadership, maintains a modest inflation rate of 4.3%, while Togo records an even lower rate of 2%. Ivory Coast, the 2023 AFCON winners, boasts a commendable inflation rate of 3.1%.
Ghana’s struggle with inflation is not new, with the country’s inflation remaining in double digits for nearly four years. Despite receiving substantial financial assistance from the IMF, World Bank, and African Development Bank under the Extended Credit Facility Programme, Ghana’s international reserves have dwindled significantly.
The country’s Gross International Reserves have plummeted from a peak of $11 billion to $5.9 billion as of January 2024, providing less than three months of import cover. This decline has exerted immense pressure on the local currency, the cedi, leading to its depreciation against major trading currencies like the US dollar.
The depreciation of the cedi has exacerbated inflationary pressures, particularly on imported goods. Food inflation stands at a staggering 27.1%, surpassing the overall inflation rate of 23.5%. Ongoing border restrictions in neighboring countries further contribute to rising prices of essential farm produce imported into Ghana.
Crucial ingredients for staple household meals, including jollof, banku, and fufu, have seen inflation rates surpassing 40% in January. Fresh tomatoes, a key component in Ghanaian cuisine, have surged by 52.3%, exerting financial strain on households across the nation.
With the general election scheduled for December 2024, Ghanaian voters are increasingly concerned about issues such as price stability, currency resilience, and unemployment. Addressing these economic challenges has become a top priority for both policymakers and the electorate as Ghana navigates through turbulent economic waters.
