Ghana's inflation drops for the first time in 5 months, what you need to know
Ghana’s annual inflation rate has slowed for the first time in five months, declining from 20.3% to 19.2%, largely due to a decrease in non-food price growth.
However, food inflation remains persistently high, rising from 27.8% to 28.3%. Month-on-month prices increased by 1.7%.
Government Statistician Samuel Kobina Annim told the media about the impact of slowing non-food inflation while warning that food prices continue to rise. “Although the rate of inflation has slowed by 0.3 percentage points, the figure of 23.5% is still the second highest in the past nine months,” said Annim.
Adding that, “In January 2025, general price levels of goods and services went up by 23.5%. Between January 2024 and January 2025 general price of goods and services went up by 23.5%," the government statistician stated. This indicates a disinflation as the rate of inflation has slowed down by 0.3% percentage points slowing down from the year-end 2024 figure of 23.8% to 23.5% for the month of January 2025.”
Leadership changes
Beyond presidential transitions, this inflation report coincides with a major leadership change at the Bank of Ghana. President John Mahama has nominated Johnson Asiamah as the new central bank governor, replacing Ernest Addison, who had held the position since 2017.
Global economic context
Globally, a trade war initiated by US President Donald Trump’s tariffs on imports from Canada, Mexico, and China threatens to disrupt supply chains and push up the cost of imports.
In response, Asiamah hinted at potential adjustments to monetary policy, stating during a press briefing in Accra, “We are focused on our mandate and may consider a few tweaks to policy in light of current challenges.”
Inflation trends and monetary policy
Ghana’s inflation rate has remained above the central bank’s 10% upper target limit since September 2021. The depreciation of the cedi, driven by the country’s debt challenges, has increased the cost of imports. To combat inflation and stabilise the currency, the Bank of Ghana has more than doubled the key interest rate during this period.
Despite maintaining the interest rate at 27% during its last two meetings, the Bank of Ghana projects that price pressures may gradually ease as the government tightens public finances under Mahama’s administration.
Meanwhile, the Mahama-led government is expected to outline its comprehensive economic strategy in March.
Historical background of inflation
Ghana has faced severe economic challenges, including major dips in key sectors like cocoa and gold, increasing inflationary pressures. Recent historical inflation rates include a surge to 38.11% in 2023, up by 6.85 percentage points from the previous year. This followed a rise to 31.26% in 2022, which was up by 21.28% from the previous year. In 2021, inflation stood at 9.97%, showing a slight increase from 9.89% in 2020, which had itself risen by 2.74 percentage points from 2019.
The new central bank administration has acknowledged that it will take time for inflation to return to its target range of 6% to 10%, citing persistent economic challenges.
