Inflation to average 11.3% in 2027 – Fitch Solutions

Inflation is expected to reach an average of 11.3% in 2027, according to Fitch Solutions. This is an increase from the 4.7% average inflation seen in 2026. The prediction is attributed to several factors, including weakening exchange rates, slight fiscal relaxation, and a surge in money supply growth. Currently, money supply growth has outpaced the nominal GDP growth by 17.1 percentage points in the second quarter of 2026.

The UK-based firm also highlighted the impact of a strong El Niño event, which is expected to peak at the conclusion of 2026. This climatic phenomenon is already contributing to a rise in global food prices and is likely to intensify imported inflationary pressures in Ghana during 2027. The report suggests that once inflation surpasses the 10% mark in the second quarter of 2027, the Bank of Ghana may commence tightening monetary policies. This could involve raising the policy rate by a cumulative 200 basis points by the end of the year.

Furthermore, the report anticipates that rising tensions in the Middle East could further escalate energy prices, particularly fuel costs, thus reinforcing inflationary trends in Ghana. The Bank of Ghana might tighten monetary policy as early as November 2026, potentially exceeding the 200 basis point hikes currently forecasted by Fitch Solutions.

The report also projects a narrowing of the current account surplus from 7.9% of GDP in 2026 to 5.3% in 2027. This decline can be attributed to a modest decrease in gold prices, which are expected to fall from US$4,400 per ounce to US$4,200 per ounce. Additionally, cocoa production is forecast to drop by 9.1% due to crop losses caused by El Niño-induced weather disruptions.

Lastly, Fitch Solutions observes that the Bank of Ghana's target of maintaining 15 months of import cover by 2028 is highly ambitious and likely unattainable. Consequently, policymakers may strive to preserve a positive real interest rate to attract portfolio investment inflows.