For the first time in years, Ghana’s inflation returned to a single digit, offering a glimmer of hope. Ghana Statistical Service says the current 9.4% is the lowest in four years. This indicates that although prices are rising, they are not rising as fast as before.
With this rate of inflation, prices are stabilizing, confidence is inching back, and the Bank of Ghana (BoG) has responded with its third rate cut in 2025, slashing the policy rate by 350 basis points to 21.5 percent.
At the Post-Monetary Policy Committee (MPC) meeting, Governor Dr. Johnson Asiamah expressed optimism that inflation will remain within the medium-term target band of 8 ± 2 percent by the end of the fourth quarter.
This is a very reassuring signal from a central bank that has battled relentless price surges for much of the past decade.
But the big question now that demands an honest answer, given Ghana’s history with single-digit inflation, is: can the country sustain this victory?
The Fragile Balance of Disinflation
The BoG Governor, Dr. Johnson Asiama, is optimistic, and it is not misplaced. Ghana’s recent success in taming inflation has been driven by tight monetary policy, fiscal consolidation, and a more stable exchange rate.
Prices have moderated, imported inflation has eased, and confidence in the cedi has improved.
Yet, the path forward to sustenance remains narrow and treacherous. Won’t this be like one of the single-digit inflations recorded in the past, which turned out to be a nine-day wonder?
Despite the optimism, the BoG Governor recognizes the risk associated with sustaining these gains.
“This is the third rate cut in 2025 and reflects confidence that inflation will remain within the medium-term target band of 8 ± 2 percent by the end of the fourth quarter. We are mindful, however, of potential risks, including global oil price volatility and possible tariff adjustments, and we stand ready to act decisively to safeguard stability,” he remarked.
Risks That Could Undermine Stability
Dr. Asiamah himself outlined that global oil price volatility and possible utility tariff adjustments. Both have the power to quickly undo months of macroeconomic progress.
Crude oil price, for instance, affects almost everything, from transportation and food to electricity and industrial inputs. A sustained rise in crude prices could directly translate into higher costs across sectors, fueling another inflationary pressures.
Then there’s the looming possibility of tariff hikes by the Electricity Company of Ghana (ECG) and the Ghana Water Company. These adjustments may be necessary to stabilize utilities, yet they carry serious short-term inflation risks.
Beyond these, exchange rate pressures, election-related spending, and import dependence remain long-standing vulnerabilities to the current favourable inflation rate. With nearly every price-sensitive sector linked to imports, any sudden depreciation of the cedi could reverse the current disinflationary gains.
The Building Blocks of Sustainability
But all hope is not lost yet. While there are risks to the sustainability that are external, others are in our hands, and with prudence, we can control them.
As experts say, it’s possible with the right mix of discipline and structural reforms.
Experts say three factors are crucial:
Fiscal Discipline: The Government must keep spending under control, including the build-up to the 2026 election. Overspending would flood the economy with liquidity and stoke inflationary tendencies. So far, the government has been earning accolades for how it has been able to put reins on the spending, but pessimists say it’s been just 9 months.
Should the government be able to continue with its fiscal prudence, Ghana has a chance to maintain this inflation for a long period.
Local Production Drive: Reducing dependency on imported food and fuel will help shield Ghana from external shocks. The success of initiatives in agriculture, renewable energy, and local manufacturing will be key.
As COPEC has been championing, Ghana needs to build strategic stocks of fuel to serve as a buffer that will shield the country from the global volatile shocks. Import substitution is now becoming a cliché; however, to sustain the inflation, it must become a reality.
Policy Coordination: Continued collaboration between the BoG and the Ministry of Finance will ensure monetary and fiscal policies don’t work at cross-purposes.
Dr. Asiamah’s assurance that the central bank “stands ready to act decisively to safeguard stability” signals a firm commitment to these principles.
The Need for a Stable and Sustained Low-Level Inflation
For Ghanaians and businesses, the numbers tell a more personal story. Inflation within 8 ± 2 percent being maintained for a long period means predictable prices at the market, manageable transport fares, and stability in school and rent costs.
These are the very basics that define everyday life, and their stability will contribute to the quality of life of Ghanaians.
Businesses confess that when prices keep changing every week, you can’t plan, and hence keeping inflation steady is good for everyone, not just businesses.
The Bottomline
Ghana’s return to price stability is a moment worth celebrating, but sustaining it will demand vigilance, restraint, and reform.
The BoG’s confidence, though encouraging, faces the reality of a global economy still marked by uncertainty in addition to local risks.
The real test is not how low inflation falls today, but how long it can stay low, without sacrificing growth or pushing the economy back into crisis.
