Key takeaways:
- Ghana’s year-on-year inflation eased to 4.6% in July
- Slower food inflation was the key driver behind the drop
- Inflation stood at 12.1% a year ago, meaning price growth has more than halved over the past 12 months
Ghana’s consumer inflation eased to 4.6% year-on-year in July, down from 5.3% in June, marking the first monthly decline since March, according to data from the Ghana Statistical Service released Thursday.
The Government Statistician, Alhassan Iddrisu, said slower food inflation was the key driver behind the decrease. “In the space of 12 months the speed at which prices are rising has fallen by more than half,” Iddrisu told reporters, noting that inflation stood at 12.1% in July last year.
The Consumer Price Index rose to 271.1 in July from 259.1 in June, reflecting changes in the overall price level based on the 2021 CPI basket, even as the pace of increase continued to slow.
On a month-on-month basis, inflation eased further to 0.1% in July from 0.2% in June, suggesting consumer prices were nearly unchanged during the month.
Domestic costs remain the biggest driver
More than 86% of Ghana’s inflation stems from goods and services produced within the country, the statistics service said, meaning domestic costs such as transport and energy carry the most weight in shaping the overall inflation figure.
Non-food items accounted for 67.6% of total inflation in July, with year-on-year non-food inflation easing only slightly to 6.1% from 6.3% in June.
Non-food inflation on a monthly basis rose marginally to 0.5% from 0.4% the month before, reflecting costs across transport, housing, rent, education, health services and insurance.
Food inflation, by contrast, eased more sharply, falling to 3.1% year-on-year in July from 3.9% in June. Month-on-month food inflation slipped to -0.1%, meaning average food prices declined slightly during the month.
The statistics service described the trend as evidence that “food relief is real,” pointing to price drops in kontomire, garden eggs, maize and several other staples that helped offset sharp increases in items such as ginger and fresh tomatoes.
Ghana’s economic recovery stays on track
Meanwhile, the gold, oil and cocoa-producing nation has been emerging from its most severe economic crisis in decades, following a 2022 sovereign default and subsequent debt restructuring.
Ghana’s finance ministry maintained its key macroeconomic targets for the year in a mid-year budget review last month, saying the country’s economic recovery remains on track.
The Bank of Ghana held its main interest rate steady for a second consecutive meeting in July, saying continued vigilance was needed to keep inflation within its target band of 6% to 10%.
With inflation now sitting below that range at 4.6%, the central bank’s next moves will likely hinge on whether the current pace of disinflation holds or gives way to renewed price pressure from non-food categories that have proven more persistent.
