Inflation to average 11.3% in 2027 – Fitch Solutions

Fitch Solutions has forecasted that inflation in Ghana will average 11.3% in 2027, up from the 4.7% average in 2026. This significant increase is attributed to several factors. Firstly, the exchange rate support is expected to diminish, while fiscal loosening will remain modest. Secondly, the money supply growth has outpaced nominal GDP growth by 17.1 percentage points in the second quarter of 2026.

Additionally, the strong El Niño event, which will reach its peak by late 2026, has already started raising global food prices and is likely to contribute to Ghana's imported inflation in 2027.

Upon reaching the 10% inflation mark in the second quarter of 2027, the Bank of Ghana (BoG) is anticipated to commence tightening monetary policy, raising the policy rate by a total of 200 basis points by the year's end. The BoG's concerns extend to the possibility of worsening Middle East tensions, which could further escalate energy prices and keep fuel costs high in Ghana, thus intensifying inflation.

The current account surplus is projected to narrow from 7.9% of GDP in 2026 to 5.3% in 2027, due to a decrease in gold prices from US$4,400 per ounce to US$4,200 per ounce, and a 9.1% reduction in cocoa production, largely attributable to weather disruptions caused by the El Niño event.

Furthermore, the Bank of Ghana has set an ambitious goal of maintaining a 15-month import cover by 2028. While Fitch Solutions considers this target highly challenging and doubtful of its realization, policymakers might strive to preserve a positive real interest rate to attract portfolio investment inflows.