Ghana’s Producer Price Inflation Falls to 1.6% Annually in January 2026, But Monthly Surge Signals New Pressures

The latest data from the Ghana Statistical Service (GSS) reveals a nuanced picture of wholesale price pressures in the Ghanaian economy. For January 2026, the year-on-year Producer Price Inflation (PPI) moderated to 1.6%, a decline from the 1.9% recorded in December 2025. This represents a 0.3 percentage point decrease and continues a trend of disinflation at the producer level. However, a stark contrast emerges on a month-on-month basis, where the PPI surged by 3.3% in January 2026, reversing the 0.8% contraction seen in the previous month. This divergence between the annual and monthly metrics is the central story, highlighting a potential resurgence in short-term cost-push dynamics after a period of relative stability.

Key Points at a Glance

• Annual PPI (Jan 2026): 1.6% (down from 1.9% in Dec 2025).
• Monthly PPI Change (Jan 2026): +3.3% (vs. -0.8% in Dec 2025), indicating renewed near-term price momentum.
• Major Sector Trend: The largest sector by weight, Mining & Quarrying (43.7% of basket), saw inflation rise to 3.7% from 3.3%.
• Manufacturing Deflation: The second-largest sector (35% weight) experienced deeper deflation at -2.2% from 0.1%.
• Energy & Utilities Spike: Electricity & Gas inflation jumped to 14.8% from 6.1%. Water Supply rose to 9.9% from 2.3%.
• Persistent Deflation: Transport & Storage (-6.9% from -3.7%) and Accommodation & Food Service (-5.4% from -3.2%) saw inflation rates become more negative.
• Annual Comparison: The current 1.6% is 26.9 percentage points lower than the 28.5% recorded in January 2025, underscoring a significant year-on-year easing in producer price pressures.

Understanding the Producer Price Index (PPI): Background & Importance

What is the Producer Price Index?

The Producer Price Index is a critical economic indicator that measures the average change over time in the selling prices received by domestic producers for their output. Unlike the Consumer Price Index (CPI), which tracks prices paid by households, the PPI tracks prices at the factory gate or wholesale level. It captures price changes for goods and services as they first enter the production process, before reaching the final consumer. In Ghana, the PPI is compiled by the Ghana Statistical Service and covers various sectors including mining, manufacturing, utilities, and services.

Why is the PPI a Leading Economic Indicator?

Economists and policymakers closely monitor the PPI for several reasons:

• Inflation Forecasting: Changes in producer prices often precede changes in consumer prices. Rising PPI can signal future cost-push inflation as businesses pass on higher input costs to consumers.
• Business Planning: For companies, the PPI provides insights into input cost trends, aiding in pricing strategies, contract negotiations, and inventory management.
• Monetary Policy: Central banks, like the Bank of Ghana, use PPI data to gauge underlying inflationary pressures in the economy, which informs decisions on interest rates.
• Sectoral Health: The disaggregated data reveals which industries are experiencing cost increases or decreases, highlighting sector-specific challenges or booms.

Ghana’s PPI Basket and Methodology

The Ghanaian PPI basket is weighted to reflect the relative importance of different economic sectors based on their contribution to the national economy. As per the latest data:

• Mining and Quarrying: 43.7% weight. This sector’s high weight means its price movements significantly influence the overall index.
• Manufacturing: 35% weight. This broad sector includes food processing, textiles, chemicals, and machinery.
• Electricity and Gas: A distinct sector with its own weight, sensitive to global energy prices and domestic tariff adjustments.
• Other sectors include Water Supply, Sewerage & Waste Management, Construction, Transport & Storage, Accommodation & Food Services, and Information & Communication.

The index is reported both as a year-on-year (YoY) percentage change (comparing January 2026 to January 2025) and a month-on-month (MoM) percentage change (comparing January 2026 to December 2025). The YoY figure shows the longer-term trend, while the MoM figure indicates immediate, volatile pressures.

Detailed Analysis of the January 2026 PPI Report

The Divergence: Annual Easing vs. Monthly Spike

The most critical observation is the decoupling of the annual and monthly trends. The annual PPI of 1.6% confirms a continued, gradual disinflationary process at the producer level compared to the high inflation environment of 2025. However, the sharp monthly increase of 3.3% is a warning signal. This suggests that while prices are 1.6% higher than a year ago, the speed of increase in the most recent month has accelerated significantly. This monthly surge could be attributed to temporary factors like seasonal price adjustments, new tax implementations, exchange rate depreciation pass-through, or sector-specific supply shocks. If this monthly momentum persists, it will inevitably feed into the annual rate in the coming months, potentially halting or reversing the disinflation trend.

Sectoral Breakdown: Winners and Losers

The overall index masks wildly different performances across the basket:

1. Mining & Quarrying (Weight: 43.7%)

As the dominant sector, its performance is paramount. Inflation here rose modestly to 3.7% YoY from 3.3%. This indicates that prices for gold, minerals, and other extracted commodities are still rising annually, but at a slightly faster clip than in December. Given its weight, this sector’s upward pressure was a key factor preventing the overall annual PPI from falling further.

2. Manufacturing (Weight: 35%)

This sector shows a dramatic and positive shift. Inflation plummeted to -2.2% (deflation) from 0.1%. This means factory gate prices for a broad range of goods are now, on average, lower than they were a year ago. This is a strong sign of reduced cost pressures or increased competition in the manufacturing sector. The 2.3 percentage point drop is the largest single contributor to the fall in the overall annual PPI.

3. Utilities: Electricity, Gas, and Water

These sectors showed alarming spikes, likely driven by adjusted tariff structures and global energy commodity prices:

• Electricity & Gas: Inflation soared to 14.8% from 6.1%. This near-2.5x increase is a major source of the monthly PPI surge, as utility costs are a fundamental input for all other sectors.
• Water Supply, Sewerage & Waste: Inflation rose to 9.9% from 2.3%, following a similar pattern.

4. Services Sectors

• Transport & Storage: Deflation deepened to -6.9% from -3.7%. This could reflect lower fuel costs (if not fully passed through), improved logistics efficiency, or weak demand for freight services.
• Accommodation & Food Service: Deflation worsened to -5.4% from -3.2%. This may indicate a post-holiday season slowdown or competitive pricing in the hospitality sector.
• Information & Communication: A rare sector showing moderation, easing to 1.4% from 1.7%, suggesting stable pricing for telecom and IT services.

Context: The Year-on-Year Improvement

The fact that the current 1.6% is a massive 26.9 percentage points below the 28.5% of January 2025 cannot be overstated. This demonstrates the success of macroeconomic stabilization efforts—including monetary policy tightening, fiscal consolidation, and exchange rate management—in bringing down the extreme producer price pressures that followed the 2022-2023 economic challenges. The economy has moved from a state of hyper-inflationary pressures at the wholesale level to one of moderate, near-target inflation.

Practical Advice for Stakeholders

For Businesses and Entrepreneurs

• Monitor Input Cost Volatility: The sharp monthly rise, driven by utilities and mining, means businesses should closely track their specific input cost baskets. A company heavy on electricity or minerals will face immediate margin pressure.
• Review Pricing Strategies: With the monthly surge, firms may need to consider selective price adjustments for their own goods and services to protect profitability, especially if their cost structure is linked to the volatile sectors.
• Supply Chain Diversification: The divergent sectoral trends highlight the need to diversify suppliers. While manufacturing inputs are getting cheaper, energy costs are rising rapidly. Exploring alternative energy sources or efficiency measures is prudent.
• Contract Clauses: For long-term B2B contracts, consider including adjustment clauses linked to official PPI or specific sectoral indices to share risk fairly between parties.

For Investors and Analysts

• Sector Rotation: The data suggests a potential rotation in investment themes. Sectors with deflation (Manufacturing, Transport) may see improved margins, while those with high inflation (Utilities) face cost challenges unless they have pricing power.
• Central Bank Watch: The Bank of Ghana will scrutinize this monthly spike. If the 3.3% MoM print becomes a trend, it could lead to a more hawkish hold or even a pause in rate cuts, impacting bond yields and currency markets.
• CPI Forecasting: Build in a gradual pass-through assumption from the PPI monthly increase to the upcoming CPI prints. The magnitude and duration of the PPI surge will be key to forecasting the consumer inflation path.

For Policymakers

• Investigate the Drivers: The GSS and relevant ministries should investigate the precise drivers of the 3.3% monthly jump. Is it broad-based or concentrated in a few volatile items? Is it a temporary statistical aberration or the start of a new trend?
• Sectoral Policy Focus: The explosion in utility inflation (Electricity/Water at ~10-15%) demands immediate policy attention. Reviewing the tariff adjustment mechanism and exploring subsidies for critical industrial consumers may be necessary to prevent a broader cost-push cycle.
• Communication: Clearly communicate the narrative: “Annual producer inflation remains on a downward trend, but we are vigilant to the recent monthly uptick.” This manages expectations and reinforces credibility.

Frequently Asked Questions (FAQ)

Q1: How can the PPI fall annually but rise so sharply in one month?

This is a common point of confusion. The annual rate compares January 2026 to January 2025. The very high prices in January 2025 (28.5% inflation) create a high base. Even if prices rise in January 2026, the increase is measured against that high base, resulting in a lower percentage. The monthly rate compares January 2026 to December 2025. It simply measures the raw, short-term change without a high base comparison. A large monthly increase can happen even as the annual rate falls, as long as the increase is smaller than the massive increase that occurred in the corresponding month a year ago.

Q2: Does a falling PPI always mean consumer inflation will fall?

Not always, and not immediately. While there is a strong historical correlation, the pass-through from producer to consumer prices depends on market competition, business pricing power, and the magnitude/duration of the PPI change. The recent monthly spike in PPI, particularly in essential utilities, is a clear risk that could feed into the CPI in the next 1-3 months, despite the currently favorable annual trend.

Q3: Which sector’s performance is most concerning in this report?

The Electricity & Gas sector is the most immediate concern. Its inflation rate jumped from 6.1% to 14.8% in one month. Since electricity is a fundamental input for almost every other sector (manufacturing, mining, services), this surge in a high-weight sector creates a broad-based cost-push risk that could undermine the disinflation trend if sustained.

Q4: What does the deep deflation in Manufacturing and Transport mean?

For Manufacturing (-2.2%), it suggests a combination of lower global commodity prices for inputs, strong domestic competition, or weak demand that forces firms to cut prices. For Transport (-6.9%), it likely reflects lower fuel costs (if not fully passed