Ghana’s inflation rate declined for the 13th consecutive month in January, easing sharply to 3.8 per cent year-on-year from 5.4 per cent in December, reinforcing signs of improving price stability in the West African economy.
The figures were released on Wednesday by the Ghana Statistical Service, which attributed the sharp slowdown largely to easing food prices.
The latest inflation print extends a prolonged disinflation trend that has reshaped Ghana’s macroeconomic outlook following the country’s recent economic crisis.
What they are saying
Government Statistician Alhassan Iddrisu said the January inflation outcome reflects a broad-based moderation in price pressures, with food inflation recording the steepest slowdown during the period.
Iddrisu said it is the lowest inflation rate recorded since Ghana’s Consumer Price Index was rebased in 2021.
“The sustained decline signals that Ghana is firmly on a path towards price stability.”
He explained that food inflation fell to 3.9 per cent in January, making it the single largest contributor to the 1.6 percentage-point drop in the headline inflation rate.
Backstory
Ghana’s inflation surge began in the aftermath of the COVID-19 pandemic and intensified through 2022 amid sharp currency depreciation, rising public debt, and mounting fiscal pressures.
- Inflation peaked at a historic 54.1 per cent in December 2022 during the height of the country’s economic crisis.
- The period was marked by soaring food and fuel prices, weakening household purchasing power, and a loss of investor confidence.
- The government subsequently defaulted on parts of its sovereign debt, triggering a wide-ranging domestic and external debt restructuring process.
Since then, fiscal consolidation efforts, exchange rate stabilisation, and tight monetary policy have helped reverse inflationary pressures and restore a degree of macroeconomic stability.
Since July last year, the Bank of Ghana has cut its benchmark policy rate by a cumulative 12.5 percentage points, reversing part of the aggressive rate hikes introduced during the inflation crisis.
Despite the progress, authorities have maintained a cautious stance, noting that inflation gains must be durable and resilient to potential external shocks.
What you should know
Ghana’s inflation rate now sits well below the Bank of Ghana’s official target of 8 per cent, which operates within a tolerance band of plus or minus 2 percentage points.
- Governor Johnson Asiama said after the Monetary Policy Committee’s January meeting that it is too early to reassess or adjust the inflation target.
- Ghana is currently operating under a three-year International Monetary Fund support programme following its debt restructuring.
- In November, the Bank of Ghana announced a reduction in its benchmark interest rate, lowering it by 350 basis points to 18%, the third consecutive cut, as inflation continues its rapid decline and economic conditions improve.
The IMF programme, designed to restore macroeconomic stability and debt sustainability, is expected to conclude in August.
