Keypoints:
- Inflation eases to 11.5 percent in August
- Cedi strengthens more than 20 percent in 2025
- Central bank cut rates to 25 percent in July
GHANA’S annual inflation rate slowed for the eighth month in succession in August, hitting its lowest level since October 2021, according to official figures released on Wednesday.
Data from the Ghana Statistical Service (GSS) showed that consumer inflation eased to 11.5 percent year on year, compared to 12.1 percent in July. The decline marks a significant milestone in the country’s economic recovery, offering reassurance after a turbulent two years marked by soaring prices and currency volatility.
Food prices still the biggest concern
Speaking at a press briefing in Accra, Government Statistician Alhassan Iddrisu said the slowdown was driven by a broad-based easing in both food and non-food prices.
‘The steady drop in inflation is reassuring, but the monthly swings we are seeing remind us that we need to keep watch on inflation, particularly short-term movements,’ he said.
Food costs, however, remain the largest single driver of inflation, reflecting persistent pressures on household budgets. Staple goods such as maize, rice and vegetable oil have seen fluctuating prices due to supply constraints and climatic factors, despite the overall downward trend.
Currency gains boost confidence
The fall in inflation comes as Ghana’s cedi continues to recover strongly. The currency has gained more than 20 percent against the US dollar so far this year, a dramatic turnaround from the sharp depreciation seen during the height of the crisis in 2022 and 2023.
Analysts say the cedi’s rebound has been supported by improving investor sentiment, stronger export revenues from cocoa and gold, and tighter fiscal discipline under the government’s economic reform programme. A firmer cedi has also helped ease the cost of imported goods, reducing pressure on domestic prices.
Central bank’s boldest rate cut
The Bank of Ghana underlined its confidence in the improving inflation outlook when it slashed its key policy rate by 300 basis points to 25 percent in July — the largest cut in its history.
Governor Johnson Asiama said at the time that the decision reflected the central bank’s belief that inflationary pressures were firmly on a downward path. The rate cut is expected to ease borrowing costs for businesses and consumers, potentially spurring investment and growth in the months ahead.
Government eyes year-end target
Finance Minister Cassiel Ato Forson echoed that optimism in early August, stating that officials were hopeful of achieving the government’s year-end inflation target of 11.9 percent ahead of schedule.
The minister argued that the combination of fiscal consolidation, debt restructuring, and stronger currency management had placed Ghana on a more stable footing. He also highlighted the importance of continued support from international partners, including the International Monetary Fund, in sustaining the recovery.
Rebuilding after crisis
Ghana, a major exporter of gold, oil and cocoa, has been recovering from what many economists have described as its most severe economic crisis in decades. Double-digit inflation, heavy debt burdens and a plunging cedi had forced the government into a $3bn bailout programme with the IMF in 2023.
Since then, a mix of monetary tightening, fiscal reforms and improving global commodity prices has helped restore confidence. Still, the scars of the crisis remain evident in high living costs, strained public services and fragile business sentiment.
Risks ahead
Despite the recent gains, economists warn that Ghana’s battle against inflation is not yet over. Food prices remain vulnerable to weather shocks, global commodity swings and supply chain bottlenecks.
There are also concerns that fiscal pressures — including the need to service restructured debt and fund public sector wages — could undermine the government’s consolidation drive. With elections due in 2028, some analysts caution that political pressures may test the discipline that has underpinned the recent recovery.
Outlook
For now, the August figures provide a strong signal that Ghana’s inflation is on a sustainable downward path. If the trend holds, the central bank may continue easing monetary policy, though officials have stressed they will move cautiously to avoid reigniting price pressures.
As households begin to feel some relief and businesses gain more room to plan, policymakers are hopeful the worst of the crisis is firmly behind them. But with global markets uncertain and domestic vulnerabilities still present, the challenge of keeping inflation under control will remain at the centre of Ghana’s economic strategy.
