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Ghana’s inflation
rate jumped to 9.08 per cent in January, the first increase in 19
months, due partly to a 30 per cent rise in petrol prices; but analysts
still expect the Central Bank to keep interest rates on hold next week.

The rise in
inflation from 8.58 per cent in December came after President John Atta
Mills’ government introduced an unpopular 30 per cent rise in petrol
and diesel prices last month to keep pace with rising crude oil prices
and to pay back public debts.

Inflation in Ghana,
the world’s second-largest cocoa producer and Africa’s No. 2 gold
miner, is set to reach double digits in coming months due to the fuel
price hike, together with a recent weakening of the cedi currency and
impending oil export revenues, analysts say.

“The fuel price will continue to impact on prices,” Ebo Duncan of the national statistics office told a news conference.

Non-food items,
including fuel, rose during January at an annualised rate of 11.83 per
cent, while food items rose just 4.84 per cent, data showed on
Wednesday.

Non-food items
account for just over half of the overall consumer price index. They
include transport costs, which surged 19.42 per cent on the year, and
utlity costs, which were up 14.79 per cent in January.

“I am certain that
inflation will increase to double digits in the near term if upward
utility and petroleum price expectations persist,” Sampson Akligoh of
Accra-based Databank Financial Services said.

The Bank of Ghana
has kept its key policy rate on hold since last July after cutting it
by a cumulative 500 basis points since November 2009 when inflation
peaked at nearly 21 per cent.

Lisa Lewin of
London-based Business Monitor International expects the Bank of Ghana
to keep its policy rate on hold at 13.5 per cent next week, avoiding a
hike that would saddle the economy with higher credit costs.

“Looking ahead to April, though, a rate hike is a distinct possibility,” she added.

Ghana began
producing oil last month, at its offshore Jubilee field, and says oil
production will help its economy grow 12.3 per cent this year, one of
the fastest growth rates in Africa. The government plans to increase
spending by 14 per cent, according to its 2011 budget. A strong cedi
helped bring down inflation last year.

The currency has weakened since late last year, hitting a record low against the dollar this month.

The Central Bank
was quoted last week as saying it was not worried about the currency’s
weakness, viewing it would counter the risk that oil exports will push
the currency up to a point where cocoa and other exports become too
expensive. This week, however, it intervened to support the cedi.