Key facts
- Ghana's CPI inflation rose to 3.7% year-on-year in May.
- Food prices were the main driver of the inflation increase.
- Non-food inflation eased slightly, while transport inflation remained negative.
- The Bank of Ghana kept its policy rate unchanged in May.
- The government expects year-end inflation at 5.0%.
Ghana's Consumer Price Index (CPI) inflation accelerated to 3.7% year-on-year in May, an increase from 3.4% in April, with food prices being the primary driver. Food inflation rose to 3.3% y/y in May from 2.2% y/y in April, influenced by higher prices for items like tomatoes, plantain, ginger, and rice. Non-food inflation saw a slight decrease to 4.1% y/y from 4.2% y/y. Transport inflation remained in deflationary territory at -2.8% y/y, a slight improvement from -3.4% in April, attributed to fuel price dynamics and base effects. Education inflation increased due to a hike in secondary school fees. The monthly CPI rose by 1.1% in May, up from 1.0% in April, as food prices increased by 2.0% m/m while non-food prices eased to 0.4% m/m. These inflationary pressures are linked to rising fuel and food costs, as well as pressure on the local currency. In response, the Bank of Ghana maintained its policy rate in May, citing balanced inflation and growth risks. The central bank anticipates inflation to rise within its medium-term target band of 6-10%, with potential upside risks from the Middle East crisis impacting crude oil prices. However, Finance Minister Cassiel Ato Forson indicated that the government now expects year-end inflation to be 5.0%, down from a previous forecast of 8.0%.