The Consumer Price Inflation (CPI) for January 2018 has dropped to 10.3 percent from 11.8 percent recorded in December 2016, further igniting debate for the central bank to cut policy rate.

Figures released by the Ghana Statistical Service (GSS) have shown that the main cause of the drop can be attributed to declines in both the food and non-food baskets that recorded drops in inflation rates.

The food basket recorded rate of 6.8 percent compared to the 8 percent recorded in December 2016. The “price drivers” for the food inflation rate were Fruits (9.2%), Vegetables (8.4%), Coffee, tea and cocoa (8.2%), Mineral water, soft drinks, fruit and vegetable juices (7.7%), Food products (7.4%) and Meat and meat products (7.3%) On the other hand, the non-food basket recorded inflation rate of 12 percent compared to the 13.6 percent recorded in December last year.

The main “price drivers” for the non-food inflation rate were Transport (17.9%), Clothing and footwear (16.7%), Recreation and Culture (13.7%), miscellaneous goods and services (12.7%) and Furnishing, Household Equipment and Routine Maintenance (12.1%).

Last month, the Monetary Policy Committee (MPC) of the Central Bank, headed by Dr. Ernest Addison, cited inflationary scare for maintaining the policy rate at 20 percent, as inflation for December 2017 (11.8) was a marginal increase from the previous month’s figure of 11.7 percent.

So the January drop in inflation, according to the research arm of Barclays Africa, makes a strong case for the Bank of Ghana to ease the policy rate going forward.

“The deceleration in inflation will have been positively received by the Bank of Ghana’s monetary policy committee, which was concerned about underlying inflationary pressures at the January meeting. It suggests that there is room for a resumption of policy easing at the March meeting.

We expect the lower inflation print in January to see resumption in policy easing as soon as the March MPC meeting. Unless there is some upside shock to the February inflation print, which we do not anticipate, there is little reason to further delay additional policy easing at the March meeting,” the bank said.