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August 2022 SSA Inflation Update - Inflation remains high despite signs of relief

In the month of August, inflation sustained its uptick in 6 of the top 10 economies in Africa. With inflation falling in Ethiopia, the country joined Angola on its disin-flationary trend. Ghana became the inflation hotbed of Africa (excluding Sudan and Zimbabwe). Across our coverage economies, we observed a broad-based slowdown in month-on-month inflation, which can be linked to the decline in crude oil prices. 

Inflation continues to hit the rooftop in Ghana
Headline inflation edged 216bps higher to 33.9% y/y in August. Both food and core inflation rose to elevated levels of 34.4% y/y and 33.6% y/y, respectively. Inflation in Ghana remains largely influenced by the sustained depreciation of the Ghanaian Cedi (-71.4% YTD) as imported food inflation rose to 35.2% y/y while the prices of locally-produced food items were higher by 33.4% y/y. While the persistent surge in inflation keeps the real rate of return in the negative territory, the Bank of Ghana’s 750bps rate hike year-to-date has been inadequate in quelling external pressures. As the country engages the IMF for a $3 billion credit facility program, the Bank of Ghana’s rate decision has been postponed to the month of October.