The Finance Minister of the Ghana Mr. Ken Ofori-Atta says, inflation is projected to peak in the final months of 2021, with inflation expected back to pre-pandemic levels by mid-2022 for both advanced economies and emerging markets country groups.
According to Finance Minister, global inflation has been declining over the past half century. However, since January 2021, headline inflation has generally trended upwards in most parts of advanced and emerging markets economies, driven by strong demand, rising commodity prices, input shortages, and supply chain disruptions.
He explained that, inflation in advanced economies is projected at 2.8 percent for 2021, up from the 0.7 percent recorded in 2020.
READ MORE: 2022 Budget Statement and Economic Policy
“In emerging markets and developing economies, inflation is expected to increase by 0.4 percentage points to 5.5 percent in 2021. Looking ahead, headline inflation is projected to peak in the final months of 2021, with inflation expected back to pre-pandemic levels by mid-2022 for both advanced economies and emerging markets country groups.”
Ken Ofori-Atta said, as emphasized in the October 2021 Regional Economic Outlook for SSA, higher food prices have impacted headline inflation expectations in the region. Average food price inflation has been on the ascendency from 2 percent year-on-year in 2019 to about 11 percent in 2021, reflecting poor weather conditions and conflict related supply disruptions. Annual average inflation in SSA is, nonetheless, projected to decline to 8.6 percent in 2022.
However, inflation is expected to be lower in the region’s two monetary unions (West African Economic and Monetary Union (WAEMU), and Central African Economic and Monetary Community (CEMAC)), despite heightened inflationary pressures caused by supply disruptions and a pickup in economic activity.
There is a mixed reaction to inflation. Whereas countries facing rising inflationary pressures have increased central bank policy rates (Mozambique, Zambia), others with relatively stable inflation (Ghana, Nigeria, Uganda) have maintained or reduced rates to ensure economic stability in the COVID-19 era.
The Finance Minister said thsi as he presented the 2022 Budget Statement and Economic Policy to the Parliament of Ghana on Wednesday, 17th November, 2021.