Inflation Slowed for Second Consecutive Month in April

Ghana’s inflation slowed for the second consecutive month in April as the impact of a 30 percent increase in gasoline prices in January eased and the cedi stabilized.

The inflation rate fell to 9 percent from 9.1 percent in March, Grace Bediako, a statistician at the Ghana Statistical Service, told reporters today in the capital, Accra. Prices rose 1.3 percent in the month, she said.

“This is a good reading, especially given the inflationary pressures are stemming from high oil prices and a relatively weak currency,” Lisa Lewin, head of sub-Saharan Africa analysis at London-based Business Monitor International, said in an e- mailed note.

The increase in gasoline prices on Jan. 4 by the National Petroleum Authority pushed inflation to 9.1 percent in January from 8.6 percent the month before. Price-growth had slowed in the previous 18 months from a five-year high of 20.7 percent in June 2009.

“The ultra low inflation figures are extraordinary and reflect the significance of stable domestic prices, fiscal prudence and a somewhat stable cedi,” Sampson Akligoh, economist at Accra-based Databank Financial Services Ltd., said in an e-mailed note.

Stability

After weakening as much as 5.7 percent against the dollar in the first five weeks of 2011, the currency has stabilized and is now down only 1.5 percent in the year, easing pressure on import costs.

Food inflation declined to 4.2 percent in April from 4.7 percent the month before, while non-food inflation accelerated to 12.2 percent from 12 percent, Bediako said.

Slowing inflation enabled the central bank to cut its key interest rate by 4.5 percentage points in the 12 months though July 2010, when it reduced the rate to 13.5 percent. The rate was maintained for the third consecutive meeting on Feb. 18. The Bank of Ghana will make its next decision come May 13.

“It looks almost certain that rates will be kept on hold,”Lewin said. “As soon as inflation edges back into the double digits (probably not until the second half) we can expect a hiking cycle to commence.”