Ghana inches nearer to single-digit inflation as August worth falls to 11.5% – Life Pulse Daily

Introduction

In a rare moment of economic optimism, Ghana has edged closer to the coveted single-digit inflation threshold as August 2025 data reveals a seasonally adjusted consumer price index (CPI) of 11.5%. This marks a notable decline from late 2024’s double-digit surges, offering policymakers and consumers cautious hope. However, as the West African nation navigates its path to stability, critical questions persist about the sustainability of this disinflation trend.

Analysis: Ghana Inflation August 2025

Headline Inflation Hits a Six-Month Low

The Ghana Statistical Service’s August 2025 CPI report underscores a year-on-year inflation rate of 11.5%, down from July’s 12.8%. This represents a significant moderation compared to year-end 2024’s peak of 20.2%, aligning with the Bank of Ghana’s strategic monetary tightening initiated in mid-2024. The month-on-month decline of 1.3%—falling to 10.2% from September 2024’s 11.5%—suggests stabilizing price momentum.

Uneven Disinflation Across Sectors

While headline inflation eases, underlying sectoral disparities remain. Food and non-alcoholic beverages continue to drive inflationary pressures at 14.8% year-on-year, starkly contrasting non-food items’ 8.7%. This divergence reflects persistent supply chain bottlenecks, weather-dependent agricultural output, and heightened demand for staple foods amid energy price volatility.

IMF Forecast: Cautious Revisions and Long-Term Outlook

The International Monetary Fund’s updated June 2025 projections reflect growing confidence in Ghana’s stabilization efforts. Initially forecasting 17.5% year-end inflation, the IMF now anticipates 12%, contingent on sustained fiscal consolidation and exchange rate control. Their medium-term forecast projects single-digit inflation by 2026, provided structural reforms address governance gaps and energy sector inefficiencies.

Summary: Key Drivers of Disinflation

August’s cooling inflation stems from converging factors: tighter monetary policy, seasonal agricultural abundance, and cedi appreciation averaging 4% since July. The Bank of Ghana’s interest rate hikes to 22% in June 2025 effectively reduced liquidity, curbing demand-driven price surges. Crucially, the cedi’s strengthened exchange rate lowered import costs for essentials like fuel and machinery parts.

Key Points

Practical Advice for Stakeholders

Consumers: Monitor local currency volatility; prioritize budgeting for essentials. Consider bulk purchasing during seasonal price dips.

Businesses: Hedge against exchange rate fluctuations; optimize supply chains to mitigate residual food inflation. Leverage government programs supporting agricultural input subsidies.

Investors: Track second-quarter 2025 GDP and labor market data. A stable cedi and single-digit inflation could unlock foreign direct investment in mining and agro-processing.

Points of Caution

The disinflation’s strength hinges on three precarious variables: (1) sustained cedi stability amid global dollar strength, (2) uninterrupted power supply to sustain manufacturing efficiency, and (3) political commitment to fiscal austerity. Should any falter, food prices could rebound, as seen in June’s brief inflationary uptick.

Comparison: Ghana vs Regional Peers

Ghana’s inflation trajectory outperforms Nigeria (15.7% in August 2025) and Sierra Leone (22.1%), but lags behind Côte d’Ivoire’s 8.9%. The contrast highlights differing monetary policy rigor: Ghana’s aggressive rate hikes versus Nigeria’s delayed tightening despite OPEC-driven oil price shocks.

Legal Implications

Ghana’s 2023 Public Financial Management Act mandates transparency in budget execution, yet August inflation data reveals 23% of expenditure variance remains unallocated. This raises accountability concerns, as off-budget borrowing could undermine inflation control. Additionally, IMF conditionality requires legislative ratification of the Enterprises (Financial Statements and Audit Requirements) Amendment Act 2025 to enhance fiscal oversight.

Conclusion

Ghana’s 11.5% August inflation marks historic progress but remains a work in progress. While the IMF’s revised forecast offers cautious optimism, structural vulnerabilities in food systems and fiscal governance demand urgent attention. The coming quarters will reveal whether this momentary respite coalesces into sustained stability or unravels under external shocks.

FAQ