ISSER Director supports World Bank’s 9.8% end 2021 headline inflation forecast

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Director for the Institute of Statistical, Social and Economic Research, Professor Peter Quartey, has backed a 9.8% end-year inflation forecast by the World Bank for Ghana.

According to the renowned economist, the headline inflation will remain within the Central Bank’s target band of 8+-2 percent.

Explaining why he agrees with the World Bank’s inflation forecast, Prof. Quartey said,“Inflation is normally driven by demand or supply factors, so if your supply of goods and services increases, then you’re likely to dampen demand pressure. We’ve seen agriculture being resilient and agric production increasing over the post-COVID era. So prices have not increased as expected. The demand pressure will not increase as high as we recorded in the pre-COVID era because most businesses haven’t recovered fully. Therefore, my expectation is that we’ll still be within the target band for the year.”

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Headline inflation for Ghana according to the World Bank is expected to rise marginally from the current 9.7 percent to peak at 9.8 percent by the end of 2021.

Going into the year 2022, the Bretton Wood institution asserts that inflation will ease with headline inflation declining and ultimately reaching 6.8 percent in 2023.

The World Bank in its latest Africa Pulse report asserts the country’s headline inflation for this year and the next two years will remain in line with the Bank of Ghana’s (BoG)medium target inflation band of 8 percent +/-2.

Touching on the recent rise in the country’s inflation rate, the Bank notes that the recent surge in the country’s inflation rate to 9.7 percent is due to a weakening of the cedi alongside increments in food prices.

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“In Ghana, weak domestic currency combined with a rise in food prices pushed headline inflation from 9% year-on-year in July to 9.7% in August 2021, slightly closer to the upper bound of the official target band of 6 to 10%. It is estimated to remain close to the upper bound at 9.8% in 2021 and gradually decrease to 6.8% in 2023,” said the World Bank.

“In the West and Central Africa sub-region, inflation in Nigeria remained high at 17.4 percent year-on-year in July 2021, although it has been decelerating slightly for the past four consecutive months. The average inflation for this year is projected at 16.5%, way above the official target band of 6 to 9%”, it added.

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