Inflation pressures are structural, requires complementary fiscal policy – Report

IC Research's analysis of December 2024 inflation, titled "Beyond the Bullseye," highlights structural inflation pressures in Ghana that require complementary fiscal policies.

The report anticipates the 2025 fiscal plan will aim to ease tax burdens to mitigate price increases in the second half of 2025. However, monetary tightening is expected to address demand-side pressures.

The Bank of Ghana is likely to hike the policy rate in its January 2025 Monetary Policy Committee meeting. IC Research suggests a real policy rate between 5.0% and 7.0% is needed to restore disinflation, predicting up to a 200 basis points increase.

December 2024 headline inflation rose to 23.8%, surpassing the IMF programme's 22% target. Food inflation climbed to 27.8%, while non-food inflation declined to 20.3%, aided by a strong Cedi appreciation.