As 2023 drew to a close, Ghana found itself grappling with the highest average inflation rate it has seen in over two decades. Data released by the Ghana Statistical Service reveals that December saw an inflation rate of 23.2%, marking a notable improvement from November’s 26.4% and registering the lowest rate for the year.
While this month-on-month improvement is encouraging, the year-end figures paint a concerning picture. The average inflation rate for the entire year stood at a staggering 40.27%, marking an 8.81% increase compared to the 2022 average of 31.36%.
The prolonged high inflation rate in Ghana throughout 2023 was primarily driven by the steep rates observed in the first eight months of the year. This period coincided with the lead-up to the approval of Ghana’s extended credit facility by the IMF, a move aimed at achieving financial sustainability.
Interestingly, despite these challenging inflation figures, Ghana’s 2023 average rate is marginally lower than the International Monetary Fund’s (IMF) projected average rate of 42.2%. It is also in close alignment with the revised prediction put forth by Fitch Solutions.
This development unfolds against the backdrop of ongoing negotiations between Ghana and its external creditors to restructure its external debt, a critical step to unlock the second tranche of the IMF bailout.
Ghana’s economic landscape faces continued uncertainty as it grapples with the repercussions of elevated inflation and the imperative need to secure financial stability through debt restructuring agreements.
