IEA predicts 15% to 17% inflation in 2025

This would be higher than the International Monetary Fund forecast of 8 per cent and the Bank of Ghana’s target of 8 +/- 2 per cent.

In its bi-monthly economic outlook, it said inflation should be reduced even further through stronger intervention measures.

The year 2024 ended with inflation of 23.8 per cent, slightly higher than the rate of 23.0 per cent recorded in November.

The end-year inflation was also higher than the 18.0 per cent projected under the IMF-sup­ported programme.

Throughout the year, infla­tion remained stuck in the low twenties, far above the Bank of Ghana’s target of 8 +/- 2 per cent.

Under the IMF programme, inflation is projected to drop to 8.0 per cent in 2025, the Bank of Ghana mid-point target. This would imply a drop of 15.8 percentage points from the 2024 rate.

This drop, the IEA stated, would, however, seem a bit opti­mistic, given the poor historical record.

It, therefore, alluded that “a more likely outcome would be 15-17 per cent.

During 2026-29, inflation is projected to remain at 8.0 per cent.

This would appear to be a more realistic scenario, although it would require strong policy measures to achieve those out­comes.”

In December, food inflation was 27.0 per cent, much higher than non-food inflation of 20.3 per cent.

Indeed, throughout the year, food inflation was almost con­sistently higher than non-food inflation and overall inflation.

This indicates the importance of food, which accounts for 43 per cent of the Consumer Price Index (CPI).

The IEA said the importance of food, along with energy and the exchange rate, in driving in­flation recently was well-known.