Ghana Set to Achieve Single-Digit Inflation by Q1 2026
Ghana is anticipated to return to single-digit inflation by the first quarter of 2026, according to a revised forecast from IC Research. This adjustment comes in response to ongoing sluggish disinflation trends and previous pressures on the foreign exchange market.
The report highlights that renewed uncertainties in external policies pose risks to the exchange rate, as well as to energy and food prices, which could subsequently influence inflation rates throughout 2025. However, the recent strong appreciation of the Ghanaian cedi is expected to alleviate some price pressures from December 2024 into early 2025, potentially mitigating any significant upward risks.
The Bank of Ghana (BoG) has provided an inflation forecast that indicates a slightly elevated outlook while maintaining a cautiously optimistic stance regarding the timeline for achieving single-digit inflation.
In its June 2024 inflation update titled "Canary in the Coal Mine," IC Research raised its inflation forecast for 2024 to a range between 19.3% and 21.3%. This increase reflects concerns over sluggish disinflation that could lead to an overshoot of the BoG's initial target of 15.0% ± 2.0% by the end of 2024. Although the Monetary Policy Committee (MPC) did not offer an updated inflation forecast for the end of 2024, it did indicate a slight increase in the one-year ahead average inflation rate, which rose to 20.1%, up from 19.0% reported at the September MPC meeting.
In November 2024, Ghana experienced a rise in annual consumer inflation for the third consecutive month, reaching 23%. This marks the highest rate since May 2024 and reflects an increase from 22.1% in October. The primary driver of this upward trend has been food prices, which surged to 25.9%, compared to 22.8% in the previous month. Staple items such as beans and yams have particularly contributed to this inflationary pressure.
As Ghana navigates these economic challenges, the focus remains on stabilizing the economy and restoring consumer confidence. Policymakers are urged to closely monitor both domestic and external factors that could impact inflation dynamics in the coming months. The anticipated return to single-digit inflation is seen as a crucial milestone for economic recovery and growth, signaling a more stable financial environment for businesses and consumers alike.
While challenges persist, Ghana’s path towards achieving single-digit inflation by early 2026 reflects a commitment to sound economic management and resilience in the face of external pressures.
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