Ghana’s inflation rate is expected to resume a downward trajectory, with Deloitte forecasting an annual average of 11.9% for 2025. This projection reflects the positive impact of a stabilizing cedi and declining domestic food prices, according to Deloitte’s “Sneak Preview of 2025” report.
The report underscores a recovery from the steep inflationary pressures of recent years. In 2024, inflation dropped from an average of 40.28% in 2023 to 22.85% for the first 11 months. By November 2024, the inflation rate stood at 23%, still exceeding the government’s target of 15% for year-end.
“Inflation has declined in six of the 11 months of 2024, partly due to the effects of high interest rates,” Deloitte noted. The firm anticipates that this disinflationary trend will persist, although the projected rate remains above the Bank of Ghana’s medium-term target of 8% ± 2%.
The anticipated reduction in inflation stems from several structural improvements, thus stabilization of the Ghanaian Cedi. Enhanced currency stability is expected to mitigate imported inflation. Lower Domestic Food Prices; a moderation in food costs will provide relief to consumers. Easing Supply-Side Pressures; reduced input costs are likely to lessen the overall inflation burden.
These factors should foster a more supportive economic environment, enabling lower borrowing costs and paving the way for potential monetary policy easing.
Despite the positive outlook, Deloitte has identified potential risks that could impede progress, these include;
Election-Related Spending: Elevated public expenditures could delay disinflation efforts.
Policy Adjustments: Expected tax hikes and utility tariff increases may heighten consumer costs, potentially offsetting gains.
Cost Pressures on Businesses: Rising operational expenses may lead to higher consumer prices.
Deloitte stresses that prudent fiscal policy will be critical to sustaining the gains made in reducing inflation. Successfully balancing fiscal consolidation with growth-friendly measures will be key to unlocking further economic recovery and supporting private sector activity.
If managed effectively, Ghana’s improving inflation outlook could herald lower interest rates, stimulate investment, and enhance overall economic stability in the medium term.
