A World Bank report highlights how rising inflation rates in the country have led to serious food insecurity and poverty, with nearly 850,000 Ghanaians pushed below the poverty line in 2022.
Titled ‘Price Surge: Unravelling Inflation’s Toll on Poverty and Food Security’, the report shows how internal and external factors such as currency depreciation, rising inflation rates and financial instability have led to macroeconomic challenges in the country, with a ripple-effect on poverty and food insecurity.
The report also sets out a bleak outlook for the country, predicting that economic growth is expected to slow down from a projected 3.7 percent in 2022 to 1.5 percent in 2023 – with the economy expected to remain sluggish at 2.8 percent in 2024 before rebounding to near potential growth by 2025.
It suggests that government should embark on structural reforms to boost economic growth and build economic resilience, including a focus on fully addressing the energy sector shortfalls which continue to threaten fiscal sustainability.
Kwabena Gyan Kwakye, World Bank Economist and co-author of the report, said that the next two years will be very tricky for Ghana’s poverty reduction efforts.
The report also highlights the need for policies that enable farmers to adjust to global demand and take advantage of market opportunities to mitigate the impact of inflation on food security in the longer-term.
Medium- to long-term policy actions may include channeling investments into agriculture research and technology transfers to help increase productivity, reduce production costs and improve the quality and safety of food.
By prioritising economic stability and sustainable agriculture, the country can work toward reducing poverty and increasing shared prosperity.
Consumer inflation ended 2022 at 54.1 percent year-on-year (y/y), approximately 5.41x over the Bank of Ghana’s upper policy target of 10 percent. However, in the first half of 2023 inflation showed signs of easing, dropping from its peak in December 2022 to 41.2 percent for April 2023.
This downward trend was however short-lived, as the rate increased by 100 basis points in May to 42.2 percent and a further 42.50 in June 2023 – dashing any hopes of sustained easing in prices of goods, particularly food items.
