GHANA’S consumer inflation rate edged down slightly to 23.5 percent year-on-year in January, from 23.8 percent in December, marking a marginal improvement amid ongoing economic recovery efforts, the Ghana Statistical Service announced on Monday.
The latest figures, reported by Reuters, indicate that while inflationary pressures have eased slightly, the rate remains the second highest in the past nine months, reflecting continued economic strain.
‘Although the rate of inflation has slowed down by 0.3 percentage points, 23.5 percent remains among the highest levels recorded in recent months,’ said Government Statistician Samuel Kobina Annim during a news conference.
Non-food prices drive inflation decline
According to Annim, the slight drop in inflation was primarily driven by a slowdown in non-food inflation, suggesting that price stability is improving in certain sectors. However, he warned that food prices continued to rise, keeping inflation well above the Bank of Ghana’s target.
The West African nation is still recovering from its worst economic crisis in decades, which has been exacerbated by challenges in its key cocoa and gold industries.
Inflation still well above central bank target
Despite the slight decrease, Ghana’s inflation rate remains far above the Bank of Ghana’s target range of 6 percent-10 percent, with a 2-percentage-point margin of error on either side.
Last week, the Bank of Ghana acknowledged that it would take longer than expected for inflation to return to this target range, citing persistent external and domestic economic pressures.
‘Inflationary pressures remain elevated, and we anticipate a more gradual decline towards the central bank’s target range,’ the central bank said in a statement.
Economic outlook: challenges and recovery efforts
Ghana, one of the world’s top cocoa and gold producers, has been battling high inflation, currency depreciation, and economic instability. These challenges prompted the government to secure a $3bn bailout from the IMF in 2023 to help stabilise the economy.
The country’s currency, the cedi, has also experienced significant volatility, affecting import prices and consumer spending power.
What’s next?
As Ghana navigates its economic recovery, policymakers will need to focus on: monetary policy adjustments to curb inflation, structural reforms in the cocoa and gold sectors and currency stabilisation efforts to ease inflationary pressures.
While inflation has shown signs of slowing, economic analysts caution that high food prices and global market uncertainties could keep inflation elevated in the coming months.
With the Bank of Ghana maintaining a cautious stance, all eyes are on upcoming monetary policy decisions to determine the trajectory of inflation in 2025.