Deceleration in Ghana’s Producer Inflation Signals Easing Price Pressures Across Key Sectors
The Ghana Statistical Service (GSS) recently released provisional figures for August 2025, indicating a slowdown in producer inflation. The Producer Price Index (PPI), a crucial gauge of price changes at the producer level, fell to 3.0 percent year-on-year, down from 3.6 percent in July. This deceleration suggests a potential easing of cost pressures for businesses, which could eventually translate to lower consumer prices. The PPI measures the average change in prices received by domestic producers for their output, excluding the construction sector and services. While the year-on-year PPI decreased, a 2.1 percent month-on-month increase suggests a slight uptick in producer prices between July and August. This nuanced picture indicates that while overall inflationary pressures might be easing, some price volatility persists.
Industrial Sector Exhibits Mixed Performance, with Notable Declines in Key Areas
The Industrial Producer Price Index (I-PPI), focusing specifically on the industrial sector, followed the broader PPI trend, declining to 3.5 percent year-on-year in August from 4.1 percent in July. This slowdown indicates reduced price pressures within industrial production. However, a 2.4 percent month-on-month increase suggests some price fluctuations within the sector. Examining specific industries reveals a diverse picture. Mining and quarrying experienced significant growth, rising 4.9 percent year-on-year, recovering from a previous dip. Manufacturing, a crucial component of the industrial sector, saw a more modest inflation rate of 1.6 percent, indicating relative price stability. In contrast, electricity and gas prices surged by 6.9 percent, potentially reflecting increased energy costs. Water supply, sewerage, and waste management remained relatively stable with a 3.4 percent increase.
Within manufacturing, various sub-sectors experienced divergent trends. Thirteen out of 23 major manufacturing groups recorded inflation above the sector average, highlighting disparities within the industry. Motor vehicles, trailers, and semi-trailers led the increases with a substantial 35.8 percent inflation, followed by leather products at 33.2 percent. Conversely, refined petroleum products and basic metals experienced deflation, registering -11.8 percent and -11.2 percent respectively. This contrasting performance reflects the interplay of specific market dynamics within each sub-sector, influencing price movements.
Construction Sector Inflation Cools, Driven by Declines in Building Construction
The construction sector, measured by the Construction Producer Price Index (C-PPI), also witnessed a slowdown in inflation. The C-PPI decreased to 4.3 percent in August from 5.3 percent in July, coupled with a 0.6 percent month-on-month decline. This suggests a cooling in construction material prices and overall project costs. Within the sector, civil engineering projects recorded the highest inflation at 11.6 percent, primarily driven by utility construction. However, building construction experienced a significant drop of 11.2 percent year-on-year, contributing significantly to the overall decline in construction inflation. Specialized construction activities, including building completion and finishing, also eased, registering 7.6 percent inflation in August, down from 8.2 percent in July.
Service Sector Experiences Rare Deflation, Marking a Significant Shift
The service sector exhibited a remarkable shift, experiencing deflation for the first time in recent periods. Service producer prices fell by 0.3 percent year-on-year, a sharp 5.3 percentage point drop from July’s 5.0 percent inflation. This deflation signals a decrease in prices across various service industries. However, a modest 0.4 percent month-on-month increase suggests some underlying price volatility despite the overall deflationary trend. Transport and storage led the decline with an 8.0 percent annual drop, potentially reflecting lower fuel costs and decreased demand. Accommodation and food services also experienced deflation, falling by 3.1 percent. Food and beverage service activities experienced a significant slowdown, decreasing from 10.8 percent in July to 5.6 percent in August. Information and communication remained the most stable sub-sector, with a modest 1.5 percent increase.
Interpreting the Data and Looking Ahead
The overall picture presented by the GSS data suggests a broad easing of producer price pressures across various sectors of the Ghanaian economy. The decline in year-on-year PPI inflation, coupled with the deflation observed in the service sector, indicates potential relief for businesses and consumers alike. However, the month-on-month increases in both the overall PPI and the I-PPI highlight the need for continued monitoring of price trends. The mixed performance within specific sectors, such as the contrasting inflation rates within manufacturing and the diverging trends within the construction sector, underscores the complexity of the current economic landscape. These sector-specific dynamics warrant further analysis to understand the underlying drivers of price movements.
It is crucial to remember that these August 2025 figures are provisional and subject to revision as more comprehensive data becomes available. The GSS will continue to monitor and analyze price trends to provide a more complete and accurate picture of the evolving economic situation. These data points will be crucial for policymakers and businesses alike as they navigate the current economic landscape and make informed decisions for the future.
