ACCRA (Reuters) - Ghana's annual consumer price inflation eased in December and its economic growth slowed in the third quarter, the West African nation's statistical office said on Wednesday, raising expectations of an interest rate cut.
Inflation dipped to 8.8 percent in December from 9.3 percent in November due in part to improved stability of the local currency, Philomena Nyarko, acting government statistician, told a news conference.
The decline was in line with the government's target to keep the pace of price increases in the single-digits.
Analysts, however, said the figure could be misleading, showing the need for a planned rebasing of the consumer price index this year.
"The relative stability of the exchange rate in December and also the base factor of the comparative month year-on-year contributed to the drop," Nyarko said.
The statistics office said the economy of the oil, cocoa and gold producer grew by by just 1.7 percent year-on-year in the third quarter of 2012, citing a decline of 2.2 percent in the country's service sector.
The Bank of Ghana has hiked its prime interest rate by 250 basis points since December 2011 but has held it steady at 15 percent since June. The Monetary Policy Committee is expected to meet this month.
"The combination of lower inflation and GDP growth provides room for the Bank of Ghana to reduce policy rates this year against the backdrop of a more resilient cedi, assuming some fiscal consolidation materialises going forward," Samir Gadio, an emerging markets analyst at Standard Bank, told Reuters.
Razia Khan, an analyst with Standard Chartered Bank, said the inflation figure was potentially misleading as the existing index underplayed the importance of currency fluctuations on domestic prices.
"Continued cedi stability, rather than the old CPI numbers, are likely to be the key influence on whether any further tightening is required," she said.
Ghana President John Dramani Mahama said last week that he expected 2012 full-year economic growth at between 8.5 and 9 percent, as oil production from Tullow's offshore Jubilee field ramps up.
Mahama was elected in a December poll, the results of which are being contested in Ghana's top court by the opposition.
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Inflation dipped to 8.8 percent in December from 9.3 percent in November due in part to improved stability of the local currency, Philomena Nyarko, acting government statistician, told a news conference.
The decline was in line with the government's target to keep the pace of price increases in the single-digits.
Analysts, however, said the figure could be misleading, showing the need for a planned rebasing of the consumer price index this year.
"The relative stability of the exchange rate in December and also the base factor of the comparative month year-on-year contributed to the drop," Nyarko said.
The statistics office said the economy of the oil, cocoa and gold producer grew by by just 1.7 percent year-on-year in the third quarter of 2012, citing a decline of 2.2 percent in the country's service sector.
The Bank of Ghana has hiked its prime interest rate by 250 basis points since December 2011 but has held it steady at 15 percent since June. The Monetary Policy Committee is expected to meet this month.
"The combination of lower inflation and GDP growth provides room for the Bank of Ghana to reduce policy rates this year against the backdrop of a more resilient cedi, assuming some fiscal consolidation materialises going forward," Samir Gadio, an emerging markets analyst at Standard Bank, told Reuters.
Razia Khan, an analyst with Standard Chartered Bank, said the inflation figure was potentially misleading as the existing index underplayed the importance of currency fluctuations on domestic prices.
"Continued cedi stability, rather than the old CPI numbers, are likely to be the key influence on whether any further tightening is required," she said.
Ghana President John Dramani Mahama said last week that he expected 2012 full-year economic growth at between 8.5 and 9 percent, as oil production from Tullow's offshore Jubilee field ramps up.
Mahama was elected in a December poll, the results of which are being contested in Ghana's top court by the opposition.
yahoo.com
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