Headline inflation has been trending downwards in 2021, staying closer to the central path target of 8 per cent for the first time since the onset of the COVID-19  pandemic, Finance Minister Ken Ofori-Atta told parliament on Thursday, 29 July 2021, when he presented the mid-year budget review.  

Headline  inflation  declined  marginally  from  10.4  per cent  in December 2020 to 10.3 per cent in March 2021 before falling sharply to 7.5 in May  2021  and  then  increased  marginally  to  7.8  per cent  in  June  2021.    

The decline  in  headline  inflation, according to him, was  on  account  of  base-drift  effects  from  the waning of pandemic-induced food price shocks and stability on the exchange rate front. 

Food inflation eased sharply from 14.1 per cent in December 2020 to 7.3 per cent June 2021. 

Non-food inflation, on the other hand, rose from 7.7 per cent in December 2021 to 8.2 per cent in June 2021. 

The uptick in non-food inflation in the year could be attributed to the recorded higher inflation for rent and rising ex-pump prices of petroleum products following the recovery in crude oil prices. 

In line with the decline in headline inflation, underlying inflation, measured by core inflation also continued to trend downwards. 

The bank’s main measure of core inflation, which excludes energy and utilities prices, remained steady at 10.9 per cent in December 2020 before decelerating sharply to 7.5 per cent in June 2021. 

However, the measures of inflation expectations firmed up in April as the implementation of tax measures and increase in ex-pump prices affected the price outlook of economic agents in the recent round of the survey, Mr Ofori-Atta noted. 

In  the  outlook,  headline  inflation  is  projected  to  remain  within  the  medium-term  target  band  of  8±2  per cent,  supported by  easing  food price  pressures, base-drift  effects,  relative  stability  of  the  exchange  rate,  and  well-anchored inflation  expectations, he said.  

He noted that the  Bank  of  Ghana  will  continue  to  pursue  prudent policies to safeguard this favourable low inflation environment. 

In the medium-term (2022-2025), inflation is expected to edge downward to an average of 7.8 per cent, supported by relatively stable exchange rate and slower money supply growth, he added.