Disinflation to accelerate in coming months

Disinflation in Ghana is expected to gather momentum in the coming months, buoyed by recent fiscal and monetary policy interventions, according to IC Insights.

The research firm attributes the anticipated decline in inflation to a combination of the Bank of Ghana’s tightened monetary stance and recent tax relief measures. Notably, the President’s assent to repeal the E-Levy Act on April 2, 2025, is expected to ease the overall tax burden and support slower price increases.

“The cooling effects of the 100 basis points hike in the policy rate to 28.0% and intensified liquidity mop-up efforts are yet to fully reflect in consumer prices. These coordinated efforts are reinforcing our outlook for a stronger disinflation trajectory, especially ahead of the May 2025 inflation data, due on June 4,” IC Insights stated.

IC Insights also highlighted the positive influence of early favorable weather conditions as the planting season begins, noting that the full benefits, especially for food prices, are expected during the third quarter’s harvest season.

For April 2025, IC Insights projects a 70 basis points drop in the annual inflation rate to 21.7%, citing a stable Ghanaian cedi and tighter monetary policy as key factors tempering demand-side pressures. However, the report warns that month-on-month inflation could pick up slightly to 1.2% due to persistent supply constraints, particularly in food items.

March 2025 marked the third consecutive month of declining inflation, with headline inflation falling to 22.4% year-on-year. This marked the lowest level in four months and helped to ease concerns that inflation might spike again following the last Monetary Policy Committee meeting.

The latest data reinforces expectations that Ghana’s economic managers are gaining traction in their efforts to stabilize inflation and restore macroeconomic balance.