Ghana’s inflation rate dropped to the lowest level in more than three years, as the country’s world-beating currency helped reduce the cost of imports.
Inflation slowed for a fifth straight month to 18.4% in May, compared with 21.2% in the previous month, Government Statistician Alhassan Iddrisu told reporters in the capital, Accra, on Wednesday. Prices rose 0.7% in the month, he said.
Ghana, Africa’s biggest gold producer, is benefiting from a surge in the price of the metal that’s fueled a 44% rally in the cedi this year — making it the world’s best-performing currency at Tuesday’s close. The gain, along with a decline in global oil prices, is helping rein in price-growth that exceeded 20% for the past three years.
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The cedi weakened 0.1% to 10.25 per dollar by 10:12 a.m. in Accra.
Food inflation rose 22.8% and non-food costs increased 14.4%, Iddrisu said.
The improving inflation reading may enable the central bank to cut interest rates next month, after it left the gauge unchanged at 28% in May, Courage Boti, an economist at Accra-based GCB Bank Ltd., said before the data release. He anticipates a reduction in borrowing costs by as much as 200 basis points.
“It will not be tenable again to keep the policy rate that high,” given that it would leave a historically “huge” gap between inflation and official interest rates, he said.
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