Ghana is on the brink of a new era of economic stability as inflation continues to decrease, signaling a significant departure from the double-digit price pressures that have burdened consumers and businesses in the past.
According to Alhassan Iddrisu, a government statistician, prices have dropped by 1.3% month over month, with annual inflation falling to 11.5% in August from 12.1% in July. This downward trend reflects a broader disinflationary pattern that has been gaining momentum since the beginning of the year.
The decline in inflation is evident across various sectors, with food inflation dropping to 14.8% in August from 15.1% the previous month, and non-food inflation decreasing to 8.7% from 9.5%. This gradual moderation is part of a longer-term trend that started in early 2025 when inflation was over 20%.
Ghana is benefiting from the surge in global commodity prices, particularly in gold and cocoa, two of its main exports. The increase in the prices of these products has led to significant foreign cash inflows, resulting in a 23% appreciation of the cedi against the dollar this year.
The stronger local currency has reduced the cost of imports, contributing to lower consumer prices in the country. Despite some fluctuations, the overall trend of the currency has been supportive of disinflation, unlike in previous years when a weakened cedi fueled import-driven price pressures.
The positive economic trend can be attributed to the government’s policies, particularly those implemented by President John Mahama’s administration. The government has focused on fiscal prudence, currency stability, and export growth as key components of its economic strategy, which have helped reset the economy after years of instability.
The disinflationary environment has provided the Bank of Ghana with the opportunity to pursue a restrictive monetary policy to reduce inflation and restore economic confidence. The central bank recently lowered its key interest rate by 300 basis points to 25%, the first significant reduction in borrowing rates in years. With inflation currently at 11.5%, economists expect another rate cut at the upcoming Monetary Policy Committee meeting on September 17, bringing it closer to the bank’s revised year-end target of 12%.
Given Ghana’s history of inflationary shocks, achieving this milestone would be a significant accomplishment for the country’s economic stability.
