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Lower inflation projected by end of 2009

By Kofi Ahovi
Databank Financial Services has projected that year-on-year inflation will fall marginally to about 17.5% by the end of 2009 from 18.13% recorded for by the end of 2008.

According to an analyst from Databank research, Sampson Akligoh, the end year inflation projection has been based on a projection that crude oil on the international market on the average would be sold at around US$55 per barrel. Currently crude oil is being sold around US$40 per barrel.

Akligoh said that though single digit inflation would elude the nation once more, higher inflation, on the other hand, could be curtailed due to the stability of food production, which is also expected to improve within the period.

The investment banking firm has also projected 17.9% inflation for the month of January, this year. The projection is 0.23 percentage points lower than the 18.13% inflation recorded for December 2008.

Akligoh further explained that expected marginal decline was due to the fact that the end of year festive season and the election period, which traditionally pushes up inflation are now over. Indeed in December inflation rose up to 18.13% from 17.44 recorded in November 2008.

He however observed that economic growth would be difficult to achieve this year due to the global recession.

The likelihood that the government would increase wages and salaries of workers this year will also contribute to the higher inflation projection.

Currently Ghana’s fiscal and external current account deficit stood at some 13.7% and 20% of Gross Domestic Product (GDP) respectively in 2008.

Fitch, one of the two credit ratings which rate risk levels of countries, has also warned that this accompanied by double inflation and compelling policy challenges will place Ghana among the most vulnerable of rated emerging markets.

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