The disinflation trend in Ghana is anticipated to continue, albeit at a moderated pace, despite challenges such as the depreciation of the cedi and expected hikes in petroleum prices.

GCB Capital, a financial advisory firm, has indicated that the near-term inflation outlook appears elevated. This is attributed to the lagged impact of the cedi's depreciation, increases in transport fares, and the implementation of the second-quarter 2024 utility tariff adjustment, which are expected to moderate the pace of disinflation in the second half of the year.

However, the continuous disinflation is expected to be driven largely by a favourable base drift, which should sustain the decline in year-on-year inflation. GCB Capital also expects the imminent main crop harvest season to boost disinflation in the food basket.

Additionally, the recent UN-backed cease-fire talks between Israel and Hamas, along with the US Federal Reserve's likely delay in changing interest rates, are seen as positive developments that could improve the outlook for crude oil supply, further supporting the disinflationary trend.

Furthermore, the imminent completion of the second review of Ghana's programme with the International Monetary Fund and the release of catalytic funding are expected to improve the foreign exchange reserve cushion and trigger a marginal correction, sustaining the disinflationary trend.

Inflation in Ghana reached a 26-month all-time low in May 2024, easing to 23.1% in the Consumer Price Index (CPI). This decline was largely driven by base effects, although price pressures from cedi depreciation, transport fare hikes, and seasonal food price effects had a moderating impact.

While the decline in inflation was expected, the pace was slower than anticipated due to these factors. The food basket recorded a sharp disinflation in May, despite a significant increase in the food CPI from April, indicating a more complex inflationary environment.