Ghana Feb inflation close to two-year low

ACCRA, (Reuters)

Inflation in Ghana fell for the eighth consecutive month to its lowest level in almost two years in February, paving the way for further interest rate cuts in one of West Africa's leading economies.

Annualised inflation fell to 14.23 percent from 14.78 percent in January, the statistics office said on Wednesday. The rate was the lowest in 23 months, central bank figures showed.

"Non-food (items) continue to exert a greater pressure on inflation than food," Magnus Ebo Duncan, director of Economic Statistics, told a news conference.

Ghana, the world's second largest cocoa producer and one of few sub-Saharan African countries with a eurobond, has been under pressure from the International Monetary Fund to bring down inflation from rates of around 20 percent in 2009.

Several months of falling inflation levels have prompted the country's central bank to ease prime interest rates twice in a row since November, and analysts said they expect more.

"We still expect more rate cuts from the Bank of Ghana, but perhaps at a more moderate pace going forward," said Razia Khan, analyst at Standard Chartered Bank in London.

The Bank of Ghana in mid-February cut its prime interest rate by a larger-than-expected 200 basis points to 16.0 percent, the lowest since June 2008 -- a move analysts expected could help the country meet its 2010 economic growth target of 5.7 percent by easing commercial lending rates.

Analysts said the rate of decline in the pace of inflation appeared to be slowing, however, which could make it less likely Ghana reaches its inflation target of 9.2 percent.

"I don't think we'll get to single digits ... but 12-13 percent by mid-year," said Richard Segal, analyst at Knight Libertas in London.

Aside from being a major cocoa exporter, Ghana is also Africa's second biggest gold miner and is on track to become a commercial oil producer by the end of this year.