Ghana’s Inflation Rate Eases to 23.5% in January 2025 Amid Ongoing Economic Challenges
Ghana’s inflation rate cooled to 23.5% in January 2025, marking a decline after four consecutive months of rising inflation, according to Government Statistician Samuel Kobina Annim. The decrease was primarily driven by a slowdown in non-food inflation, although food prices continued to rise.
Professor Annim emphasized the need for collaboration between policymakers and financial institutions to tackle the ongoing issue of rising food prices and stabilize inflation. He noted, “The Ghana Statistical Service continues to engage policymakers. The Bank of Ghana does not only rely on headline figures but also disaggregated data to inform policy decisions.”
Despite this decline, inflation remains significantly above the Bank of Ghana’s target range of 8% (with a 6%-10% tolerance band). The central bank recently warned that it may take longer for inflation to return to target levels.
The easing inflation rate comes at a time when Ghana is transitioning to a new central bank still recovering from economic turmoil in its cocoa and gold sectors.
While the slowdown in inflation offers some hope, the 23.5% rate is still the second highest in nine months. Challenges in the cocoa and gold sectors have exacerbated economic conditions, negatively impacting government revenue and currency stability. The Bank of Ghana faces a delicate balancing act of easing inflation while managing high interest rates that could hinder economic growth.
With inflation remaining far from the target, significant shifts in monetary policy are unlikely in the short term. As Ghana works towards economic stabilization, factors such as exchange rate fluctuations, fiscal reforms, and external shocks will play a crucial role in determining how quickly inflation can be reduced to sustainable levels.
In Ghana, the Consumer Price Index (CPI) tracks the price changes of 740 goods and services consumed for daily living. The index weights are based on the expenditures of both urban and rural households across the 16 regions. The most significant categories in the CPI include Food and Non-alcoholic Beverages, Housing, Water, Electricity, Gas and Other Fuel, Clothing & Footwear, Transport, and Furnishings and Household Equipment Maintenance. Other categories encompass Education, Health, Miscellaneous Goods and Services, Restaurants and Hotels, Alcoholic Beverages, Recreation and Culture, and Communications.
By: Frank Owusu Obimpeh
