The Institute of Statistical, Social and Economic Research (ISSER) has pointed out that the persistent rise in inflation in Ghana in 2022 was the highest in over two decades.
Ghana recorded an inflation of 54.1% in December 2022, after the nation’s economy went through troubling times due to debt default and a worsening fiscal economy. This the government blamed largely on the Russian/Ukraine war and the Covid-19 pandemic, though some economists and market watchers rubbished that position.
The poor fiscal economy aggravated the monetary economy, as interest rates surged rapidly, whilst the cost of borrowing also reached alarming levels.
In its 2022 State of the Economy Report, ISSER said the year 2022 was characterised by unprecedented macroeconomic imbalances which generated uncertainties in the monetary and financial sector.
“Cumulatively, the influence of food inflation component appeared more intense. Food inflation rates were largely driven by four food subgroups; water; milk, other dairy products, and eggs; sugars, confectionery, and desserts; and fruits and vegetable juices”, it stated.
It added that due to the persistent inflation, the Monetary Policy Committee of the Bank of Ghana unusually increased the policy rate four times within 2022.
Indeed, the Bank of Ghana’s base lending rate was increased to 27% in December 2022 from 14.5% in January 2023.
ISSER further stressed that Interest rates of deposit money banks (DMBs) were generally unstable in 2022.
This it stated was partly attributable to the high rate of inflation and the subsequent adjustments in the policy rate.
Inflation has since January 2023 fallen by about 20%. It is presently going for 38.1% (September 2023).