Inflation Slows Down to an Eight-Month Low

Inflation maintained its downward trajectory for the fourth consecutive time to begin the second quarter of the year at its lowest since August last year, largely driven by calm in some crucial local inflationary determinants. Key among these determinants are the prices of crude oil products, which have seen a sustained drop over the past few weeks and the Cedi’s stability in most part of the year, with the Cedi beginning to crawl back some of its earlier losses later in April.

Accordingly, the inflation rate fell to 21.2% in April, registering a 120 basis points (bps) drop from 22.4% in the previous month and an accumulated drop of 230 bps this year. The Ghana Statistical Service notes that the sustained drop in the inflation readings offers a positive signal of moderating inflationary pressures. It further adds that the overall outlook is cautiously optimistic, with opportunities to consolidate gains made and enhance economic resilience. However, despite the drop in the annual inflation reading, inflation between March and April 2025 edged up to print at 0.8%, up from 0.2% between February and March 2025.

Food inflation sustained its third consecutive dip in April, as it plummeted to 25.0%, down from 26.5% in March, as nine out of the observed fifteen sub-group items recorded rates lower than the group’s average. Month-on-month food inflation, however, nudged up to 0.9% in April, up from a deflation of 0.2% in March. This came on the back of substantial increases in the prices of ‘live animals’, ‘oils & fats’, and ‘vegetables & tubers’ in the month.

The persistent drop in the non-food inflation category continued for the sixth consecutive time in April, with the inflation rate further dropping to its lowest in more than a year to print at 17.9%, down from 18.7% in March. The month-on-month food inflation remained unchanged at 0.7% in April as a comparatively larger number of items in the non-food inflation basket recorded price increases between March and April. Transport recorded the biggest price driver in this category, slowing down from 0.1% in March to register a deflation of 0.6%.

Across the regions, the inflation rate ranged from 18.3% in the Volta region to 37.1% in the Upper West region. Inflation on both local and imported items saw declines from 24.0% and 18.7% to 22.7% and 17.7%, respectively.

At the next sitting of the Monetary Policy Committee due next month, the committee will be expected to review its monetary policy tightening stance as inflation stays on a downward trend. Consequently, it is expected that the committee would either stay or cut the policy rate as risks to the inflationary outlook gradually diminish.