Report Predicts Accelerated Disinflation in the Coming Months

Ghana is poised to experience a faster pace of disinflation in the coming months, driven by recent fiscal adjustments and a tighter monetary policy stance, according to a new report by IC Insights.

The research firm highlighted that the latest drop in the country’s annual inflation rate is a positive development, suggesting that inflationary pressures are beginning to ease. This follows the Bank of Ghana’s decision to raise its benchmark interest rate by 100 basis points to 28.0%, alongside a more aggressive approach to liquidity management.

“We are encouraged by the recent moderation in headline inflation, though the full effect of the central bank’s policy tightening and liquidity mop-up operations is yet to be reflected in consumer prices,” IC Insights noted. The report added that these monetary measures, combined with new fiscal policies, should lead to a more noticeable cooling of inflationary pressures in the months ahead.

One of the key fiscal moves cited was President Nana Akufo-Addo’s assent to the repeal of the Electronic Transfer Levy (E-levy) Act on April 2, 2025. The removal of this tax, which had been widely criticized for burdening consumers and informal businesses, is expected to ease overall price growth by reducing transaction costs across various sectors.

“These coordinated monetary and fiscal actions significantly improve our outlook for disinflation,” the report stated, adding that the effects should begin to materialize by May 2025, with the inflation data scheduled for release on June 4, 2025.

IC Insights also identified emerging signs of improved agricultural prospects, as favorable weather patterns mark the beginning of the planting season. The approval of the 2025 fiscal budget includes provisions for targeted agricultural support, which the report said could help ease food supply constraints. However, it emphasized that any benefits from this intervention would likely become evident during the third quarter, coinciding with the crop harvest period.

Looking ahead to April 2025, the report projects a further decline in annual inflation, estimating a drop of 70 basis points to 21.7%. The stabilization of the Ghanaian cedi, coupled with stringent monetary policies, is expected to reduce demand-driven inflationary pressures. Nonetheless, IC Insights cautioned that month-on-month inflation may still see a slight uptick, rising to around 1.2%, mainly due to ongoing supply challenges—especially in the food sector.

Ghana’s inflation outlook has shown steady improvement in recent months. In March 2025, the annual headline inflation rate fell to 22.4%, representing a 70 basis point decline from the previous month. This marked the third consecutive month of disinflation and brought the rate to its lowest level in four months, signaling growing stability in price trends.

The sustained moderation in inflation also comes as a welcome development amid concerns raised by the Bank of Ghana’s Monetary Policy Committee (MPC) about a potential rebound in domestic interest rates. Lower inflation could ease the pressure on yields, improving the overall investment climate and helping to anchor inflation expectations.

While IC Insights remains cautiously optimistic, it acknowledged that risks remain—particularly from external shocks, energy prices, and potential supply chain disruptions. However, the combination of sound monetary decisions, supportive fiscal reforms, and positive developments in agriculture could provide the right environment for sustained disinflation through the second half of the year.

The coming months will be critical in determining whether this momentum can be maintained. For now, the signs point to a more stable inflation trajectory for Ghana as policymakers continue to align their efforts to tame inflation and support economic recovery.