Ghana’s recent progress in bringing down inflation could face a new challenge as rising global oil prices linked to renewed tensions in the Middle East threaten to push up transportation costs and slow the decline in prices, the Bank of Ghana (BoG) has warned.
The warning comes after the Monetary Policy Committee (MPC) noted that the escalation of the Middle East conflict has disrupted global energy markets, pushing crude oil prices above US$85 per barrel and creating fresh risks for countries that depend heavily on imported fuel, including Ghana.
According to the BoG, the increase in crude oil prices has already started affecting domestic prices, particularly through transportation costs.
The Bank explained that the rise in Ghana’s June 2026 inflation rate to 5.3% from 3.7% in May was partly influenced by a temporary increase in transport fares following the earlier surge in crude oil prices.
For ordinary Ghanaians, the concern is straightforward: when fuel prices rise, the cost of moving goods across the country usually increases. Transport operators spend more on fuel, traders pay more to move goods, and those higher costs can eventually reflect in prices at markets and shops.
However, the BoG said the recent increase in inflation does not yet represent a return of broad price pressures, noting that inflation remains below the lower limit of the Bank’s medium-term target range of 8% ± 2%.
The Bank attributed the June increase mainly to base effects and temporary transport fare adjustments.
Base effects simply mean that changes in prices are partly influenced by what happened during the same period last year. If prices were unusually low or high a year earlier, current inflation figures can appear higher or lower even without a major change in current conditions.
Despite the inflation risks, the central bank said Ghana’s economy continues to show strong signs of recovery.
Real Gross Domestic Product (GDP) growth reached 6.4% in the first quarter of 2026, slightly higher than the 6.2% recorded during the same period in 2025.
Economic activity has also strengthened, with the Bank’s Composite Index of Economic Activity (CIEA) growing by 13.4% in May 2026 compared with 4.4% a year earlier.
The improvement was supported by stronger private sector credit, international trade activity, industrial production and tourism.
One of the strongest indicators of the recovery has been the return of private sector lending.
Credit to businesses and households expanded by 41.2% in June 2026 compared with 8.6% a year earlier, supported by lower lending rates and increased demand for loans.
Average lending rates declined significantly to 15.6% from 27% during the same period last year, making borrowing cheaper for businesses.
The BoG believes the stronger credit environment could support business expansion, investment and economic growth. However, it is closely watching whether rising global risks could affect this momentum.
Beyond oil prices, the Bank also highlighted possible pressures from exchange rate movements and potential adjustments in utility tariffs.
The cedi has already experienced some pressure, depreciating by 9.5% against the US dollar by July 17, 2026, despite Ghana’s improved external position.
The country’s trade performance remains a major source of strength, with the trade surplus increasing to US$8.8 billion in the first half of 2026 from US$5.8 billion during the same period last year, supported mainly by gold and cocoa exports.
Foreign reserves stood at US$12.9 billion at the end of June, enough to cover about five months of imports.
The BoG said these reserves provide Ghana with a buffer to manage external shocks, but warned that prolonged global uncertainty could affect inflation, growth and financial conditions.
Ghana’s economic recovery is gaining momentum, but maintaining the gains will depend on how global events, especially energy prices, evolve in the coming months.
