Inflation Rate Fell for 7th Month in January

Ghana’s inflation rate fell for the seventh consecutive month in January, raising expectations the Bank of Ghana will cut interest rates next week for only the second time in three years.

The rate dropped to 14.8 percent from 16 percent in December, Grace Bediako, a statistician at the Ghana Statistical Service, told journalists today in the capital, Accra. Prices rose 1.6 percent in the month.

The decline in the inflation rate from 20.7 percent in June prompted the central bank to cut its key rate by half a percentage point to 18 percent in November. Bank Governor Kwesi Amissah-Arthur said last month that further rate cuts are likely if inflation continues to slow. The Monetary Policy Committee will announce its next decision on Feb. 19.

Slowing inflation is “reinforcing our view that the way is open for the MPC to cut interest rates by at least 100” basis points, Razia Khan, Standard Chartered Bank’s regional head of research for Africa, said in an e-mail today.

Inflation has slowed after the domestic currency, the cedi, stabilized against the U.S. dollar, cutting the price of imports in the West African nation. After falling 15 percent in the first six months of 2009, the currency has gained 4.3 percent since July. The cedi was little changed at 1.435 against the dollar as of 1:05 p.m. today.

Potential increases in utility prices and wages may reignite ”inflationary pressures” over the next four months, Sampson Akligoh, an Accra-based economist with Databank Financial Services, said in an e-mail.

Food prices rose 1.3 percent in January from the month before, with non-food items increasing 1.8 percent.

To contact the reporter on this story: Emily Bowers in Accra at ebowers1@bloomberg.net.