Ghana is expected to experience a decrease in inflation, dropping from 23.4 percent in December 2023 to a projected rate of 22.4 percent in January 2024.

In their latest report on Ghana, research firm IC Research has disclosed that the country's inflation is anticipated to decrease, with projections indicating a decline from 23.4 percent in December 2023 to 22.4 percent in January 2024.

The research firm attributed the foreign exchange out-turn recorded from late December 2023 to early January 2024 as a factor expected to perpetuate price pressures within the inflation basket.

“Our forecast shows a modest decline in the annual inflation rate to 22.4% y/y in January 2024 as the improved FX out-turn in late December 2023 into early January 2024 sustains the lid on price pressures,” the firm projected.

It further added that local energy prices are expected to remain stable at the pumps on the back of downward bias in the January 2024 Consumer Price Index (CPI) window relative to the same period in 2023.

The research firm also predicts that a reduction in electricity tariffs implemented in December 2023 will help support the disinflation process in January 2024.

“We also anticipate the lagged impact of the lower electricity tariff implemented last month to sustain the disinflation in January 2024. However, the authorities have signalled the introduction of VAT [Value Added Tax] on residential use of electricity above lifeline consumers (>30kWh) with effect from January 1, 2024,” IC Research said.

The firm, however, pointed out that the new taxes introduced in the 2024 budget of the government will weaken the pace of disinflation in early 2024 while the Bank of Ghana is expected to remain cautious on the timing of policy rate cuts.