Ghana is celebrating its return to a single-digit inflation for the first time in years, but an economist at Academic City University, Dr. Paul Appiah Konadu, is cautioning government officials against complacency.
The economist’s warning comes with the fear that the gains made could easily be lost without strict fiscal discipline and consolidation.
Dr. Konadu tells The High Street Journal in an interview that the drop in inflation did not happen by chance. It was partly the result of prudent fiscal management, restrained spending, and coordinated monetary policy by the Bank of Ghana.
But he fears that the recent excitement over the achievement may tempt policymakers into relaxing the very measures that brought the progress.
“The government should keep up with the fiscal consolidation and fiscal discipline. That has been one of the contributing factors to the decline in inflation. I think the government should not be swollen-headed. We should keep up with prudent expenditure,” he cautioned.
The economist emphasized that with inflation dropping below the government’s 2025 end-of-year target ahead of schedule, the country has entered a delicate phase where overconfidence could reverse the trend.
Dr. Konadu warned that the recent depreciation of the cedi in the past few weeks could introduce fresh inflationary pressures, especially as the festive season approaches. This is a period often characterized by higher consumer demand and price hikes.
Aside from the fiscal caution to the Central Government, he further advised the Bank of Ghana to take a precautionary stance in any attempt to review the policy rates in order to safeguard the macroeconomic stability we have achieved.
He advised that both the fiscal and monetary authorities must remain vigilant and coordinated, with the government maintaining prudent expenditure while the central bank sustains a mildly tight monetary stance to contain potential inflationary pressures.
“The Bank of Ghana should also maintain some monetary tightening going into the end of the year. Because there is likely to be some inflationary pressures going into the end of the year due to the upticks in depreciation we have experienced in the past couple of weeks. The price of goods in December is likely to see an upward surge,” he analyzed.
He further noted, “The Bank of Ghana should take a precautionary stance in any attempt to review the policy rates in order to safeguard the macroeconomic stability we have achieved.
Ghana’s inflation, which started the 2025 fiscal year above 20% has seen a dramatic reversal to hit a single-digit of 9.4%. This is thanks to tighter fiscal controls, exchange rate stabilization efforts, and a gradual easing of global price shocks.
But the economist says the country is not out of the woods yet, as complacency from both sides of the government and the Central Bank can derail the gains. He believes maintaining discipline will help ensure the gains eventually translate into real improvement in living standards.
