Ghana’s Inflation Eases for Fourth Consecutive Month, but Food Prices Remain High
Ghana’s inflation rate continued its downward trajectory for the fourth consecutive month, reaching 21.2% in April 2025, down from 22.4% in March. This positive trend signals a gradual easing of price pressures across various sectors of the economy. The consistent decline offers a glimmer of hope for consumers and businesses grappling with the persistent challenge of high living costs. However, while the overall inflation picture appears to be improving, the persistent elevation of food inflation at 25% remains a significant concern, particularly for lower-income households whose budgets are disproportionately impacted by food prices. The continued high food inflation requires targeted policy interventions to address the root causes of food price volatility and ensure food security for vulnerable populations.
Moderation in Food and Non-Food Prices Drives Disinflation, but Monthly Inflation Rises
The deceleration in year-on-year inflation can be attributed to moderation in both food and non-food prices. This suggests that the various policy measures implemented by the government and monetary authorities may be starting to yield positive results. However, the slight uptick in monthly inflation from 0.2% in March to 0.8% in April warrants close monitoring as it could potentially indicate a resurgence of inflationary pressures, especially in the food sector. The Ghana Statistical Service (GSS) highlighted the increase in month-on-month food inflation while non-food inflation remained stable, emphasizing the need for continuous vigilance and proactive measures to prevent a reversal of the positive disinflation trend.
Local Goods Inflation Outpaces Imported Goods, Revealing Domestic Supply Chain Inefficiencies
A key observation from the April inflation data is the widening gap between inflation for locally produced goods and imported goods. Year-on-year inflation for domestic items stood at 22.7%, significantly higher than the 17.7% recorded for imported goods. This disparity, coupled with the fact that monthly inflation for local items was double that of imports, points to internal supply chain bottlenecks and inefficiencies as major contributors to Ghana’s inflation woes. Addressing these supply-side constraints, such as improving transportation infrastructure, streamlining logistics, and reducing post-harvest losses, is crucial to achieving sustainable price stability.
Policy Recommendations to Support Disinflation and Mitigate the Impact on Vulnerable Groups
The GSS, in its April Consumer Price Index bulletin, proposed a range of policy recommendations to bolster the disinflation process and provide support to vulnerable groups affected by high prices. These recommendations include enhanced monitoring of inflation-sensitive food items like ginger, beans, and vegetable oil, and expedited implementation of the Agriculture for Transformation Programme. Strengthening agricultural productivity and efficiency can help increase food supply and moderate food prices. The GSS also stressed the importance of maintaining macroeconomic stability and strengthening existing social protection programs like the Livelihood Empowerment Against Poverty (LEAP) program, the Capitation Grant, the National Health Insurance Scheme, and school feeding initiatives to cushion the impact of inflation on vulnerable households.
Call for Business Sector Cooperation and Household Budgetary Prudence
Beyond government interventions, the GSS called on businesses, particularly those in the food and hospitality sectors, to reassess their pricing strategies, especially where input costs have decreased. Responsible pricing practices can contribute significantly to a more stable price environment and benefit both consumers and businesses in the long run. Households were also encouraged to practice prudent budgeting and stay informed about price trends in essential goods and services, particularly food and transportation, to make informed purchasing decisions and manage their household finances effectively.
Sustained Efforts and Multi-Pronged Approach Needed for Long-Term Price Stability
The continuous decline in Ghana’s inflation rate is a positive development, but sustaining this trend and achieving long-term price stability requires a multi-pronged approach that addresses both demand-side and supply-side factors. This includes prudent macroeconomic management, targeted interventions in the agricultural sector to boost food production and improve supply chain efficiency, and strengthened social safety nets to protect vulnerable populations from the adverse effects of inflation. Continued collaboration between the government, the private sector, and households is essential to creating a more stable and inclusive economic environment for all Ghanaians. While the recent decline in inflation offers a reason for optimism, vigilance and sustained efforts are crucial to ensure that the gains made are consolidated and translated into tangible improvements in the living standards of all citizens.
