Business confidence in the Ghanaian economy has soared, the latest Bank of Ghana (BoG) Confidence Survey, has said.

“The improved business sentiments were driven by the achievement of short-term company targets and optimism about companies’ growth prospects,” the BoG said in a Monetary Policy Committee (MPC) statement issued in Accra on Monday.

The MPC held its 104^th regular meeting last week to deliberate on recent global and domestic development and how they have shaped macroeconomic conditions and assessed risk to inflation and growth outlook, to decide the new policy rate which was maintained at 14.5 per cent.

The prime or policy rate is the rate at which the BoG lends to commercial banks in the country.

The Central Bank saidthe growth in the Ghana Purchasing Manager Index (PMI) was an indication of the growing confidence of businesses in the economy.

It said the PMI increased for four consecutive months in the second half of 2021, a development which was consistent with the observation of a steady rise in economic activity.

PMI gauges the rate of inventory accumulation by managers of private sector firms and measures dynamics in economic activity.

The BoG, however, said that consumer confidence softened because of recent increases in ex-pump petroleum prices and the announcement of new tax measures in the 2022 budget.

After falling to 7.5 per cent in May 2021, the BoG said inflation increased throughout the second half of the year, ending December 2021 at 12.6 percent.

It said the Non-food inflation went up from 9.2 percent in May 2021 to 12.5 percent in December 2021 while food inflation, over the same period rose sharply, moving from 5.4 percent in May 2021 to 12.8 percent in December 2021.

“The upward trajectory of inflation in the second half of 2021 reflected food supply challenges, rising crude oil prices, and some pass-through effects of exchange rate depreciation in the last quarter. At 12.6 percent for December 2021, headline inflation had moved outside the upper band of the medium-term target by 2.6 percent,” said the BoG.

It said in line with the increases in headline inflation, underlying inflationary pressures, measured across all the Bank’s core measures of inflation, also increased over the period.

“The main core inflation measure, which excludes energy and utility, increased from 7.3 percent in May 2021 to 11.8 percent in December 2021. In addition, the weighted inflation expectations index, which captures inflation sentiments of consumers, businesses, and the financial sector, also picked up significantly in December 2021,” the BoG, said.

The BoG said bank’s updated Composite Index of Economic Activity (CIEA) recorded an annual growth of 10.2 percent in November 2021, compared with 11.9 per cent in the corresponding period of 2020.

“The key drivers of economic activity during the period were increased industrial production, consumption, exports, construction activities, and air-passenger arrivals,” it said.