Over the past year, Ghana’s inflation has consistently outpaced the interest earned on demand deposits, leading to a stark erosion of real savings for ordinary depositors. From July 2024 to July 2025, inflation fluctuated sharply, reaching a peak of nearly 24% by December 2024 before gradually cooling to 12.1% in July 2025.
Meanwhile, the interest rate on demand deposits, the type of bank account where money can be withdrawn at any time, remained flat at 2.63% throughout this period.
This flatness in nominal rates, while seemingly stable and predictable, masks a silent and ongoing loss. The critical measure for savers is the real return, the nominal interest minus inflation. With inflation running well above 20% for much of the period and the deposit rate fixed near 2.6%, depositors effectively suffered real returns as negative as -21% during the peak inflation months. Even as inflation declined in the first half of 2025, the real loss remained steep, hovering near -9.5% as of July 2025.
The reason this happens lies in the nature of demand deposits themselves. Banks offer low, steady rates on these accounts because the funds must be liquid and immediately accessible, limiting the bank’s ability to invest or lend the money at higher returns. But in an inflationary environment, this stable nominal rate becomes a trap. Inflation steadily erodes the purchasing power of the money sitting idly in these accounts, quietly reducing the real value of people’s savings month after month.
This mismatch between inflation and deposit rates is more than just a number, it’s a fundamental challenge for anyone relying on demand deposits as a store of value. While the safety and liquidity of these accounts offer comfort, they also come at a hidden cost: the slow but relentless shrinking of wealth. Over the course of the year, savers have effectively paid an “inflation tax” on their idle cash, as the cost of living surged far beyond the meager interest paid by banks.
For those looking to protect their wealth, this reality demands a rethink. Simply keeping money in a demand deposit account no longer guarantees preservation of value. Instead, exploring alternative investments, such as Treasury bills, bonds, or inflation-protected securities, may be essential to outpace inflation and maintain purchasing power.
In short, while demand deposits offer convenience and safety, the past year has underscored a painful truth: with inflation running at 12.1% and deposit rates flat at 2.63%, your money is losing nearly 10% of its real value each year.
