Inflation Declines into 2025 Year-End Target

Ghana’s inflation rate looked set to fall into the single digits for the first time since July 2021, as the latest inflation print showed the eighth successive decline, having consistently eased from a high of 23.8% at the close of last year. August’s inflation statistics revealed that the headline inflation number decelerated from 12.1% in the previous month to 11.5%, its lowest in nearly four years. According to the Ghana Statistical Service, the sustained slowdown in the rate of increase in the consumer price index showed a real and sustained shift in prices, proving that the nation’s stabilization programme is delivering results.

August’s inflation print gives an indication that the government’s end-of-year inflation target of 11.9% remains attainable, as the disinflationary path is expected to persist further. Month-on-month inflation cooled off in August, recording its second deflation for the year at 1.3% from an inflation rate of 0.7% in July. The inflation outlook is expected to be pressured in the remaining months of the year, buoyed by the emergence of forex demand pressures amid limited supply by Ghana’s central bank.

Overall food inflation slowed down to 14.8% in August, having persistently declined from 2025’s year high of 28.3% in January. The drop was supported by a significant dip in the month-on-month inflation reading for this category. Inflation between July and August showed a deflation of 2.5% in the current month compared to an inflation of 0.6% in the previous month. This came as ten out of the fifteen observed items in this category, led by Vegetables, tubers & plantain (-8.4%) and Oils & fats (-2.5%), saw a general decline in prices between July and August.

The non-food inflation basket remained on its declining trajectory, registering its ninth consecutive drop in August. Overall non-food inflation came in at 8.7% in August, down from 9.5% in July, with the drop being sustained by the easing of transport costs. Month-on-month non-food inflation fell from 0.7% to record a deflation of 0.1% as the number of items in this category that recorded price reductions surpassed those that registered price increases.

Across the regions, the inflation rate ranged from 6.1% in the Bono East region to 21.8% in the Upper West region. Inflation on both local and imported items fell concurrently for the fifth consecutive time from 12.9% and 10.0% in July to 12.2% and 9.5% in August, respectively.

The monetary policy committee of the central bank will be expected to sit next month to review recent macroeconomic developments and conclude with the announcement of the policy rate, where the market will be expecting the committee to stay on a cautious path following looming price pressures resulting from the Cedi’s renewed troubles.