Inflation Begins Second Half of 2025 at 12.1%

Inflation maintained its persistent drop into the second half of the year, registering its seventh consecutive drop to close July at its lowest since October 2021. The recent inflation print gives an indication of the inflation rate gradually inching towards the central bank’s medium-term inflation target band of 10.0%±2.0%, having slowed down from a high of 23.8% at the close of 2024 to open the second half of the year at 12.1%. The month-on-month inflation reading, which has been widely erratic in 2025, however, rose in July to print at 0.7%, having earlier slowed down from 0.7% to record a deflation of 1.7% in June.

The sustained drop in the inflation readings has largely been supported by the local currency’s recent appreciation and onward stability, as well as a drop in the prices of petroleum products and subsequent cuts in transportation costs. The government, during the presentation of its mid-year budget review to Ghana’s parliament last month, maintained its end-year inflation rate at 11.9% as the risks to the inflation outlook remain minimal. This target is expected to be met before the close of the year, barring any unexpected shocks to the local economy.

Food inflation edged down for the sixth consecutive time in July, slowing down marginally from 16.3% in June to print at 15.1% as some food items, such as Ginger at 128.4%, Crab at 69.0%, and watermelon at 68.3%, among others, came in among the items with the highest inflation numbers. Month-on-month food inflation rose from a deflation of 0.5% last month to post an inflation figure of 0.6% in July, with some items such as Coffee & coffee substitutes and Vegetables registering a significant increase in prices between June and July.

The non-food inflation basket registered its seventh consecutive decrease, as it declined from 11.4% in June to fall into a single digit at 9.5%. This came as Transport maintained its deflation level from 1.8% in June to 7.7% in July, as a majority of the items in this basket recorded rates lower than the group’s average rate. Month-on-month non-food inflation, however, saw an increase from -1.8% in June to 0.7% in July, as all the sub-group items, with the exception of Insurance & financial services and Housing & utilities, underwent increases.

Across the regions, the inflation rate hovered between 7.7% in the Central region and 24.8% in the Upper West region. Inflation on both locally produced items and imported items saw decreases, down from 14.0% and 12.5% in June to 12.9% and 10.0% in July, respectively.

The July sitting of the Monetary Policy Committee of the central bank, saw the committee by a majority decision vote to hand down a record 300 basis points cut to the policy rate, slashing the rate from 28.0% to 25.0%, with the committee further advising that it will continue to assess incoming data and will likely reduce the policy rate further, should the disinflation trend continue. The committee’s decisions were guided by improvement in macroeconomic conditions, a broadly anchored inflation expectations, strengthening external buffers, and returning confidence in the domestic economy.