The Recent Decline in Ghana’s Inflation – What are the key drivers?

As inflation continues to pose significant challenges for economies around the world, a few countries including Ghana are beginning to show signs of resilience. Ghana’s recent inflation figures have sparked widespread concern and debate. Weighing in on the matter, Anthony Kwesi Ashun, a U.S.-based expert with extensive experience in finance and banking, has shared his insights on this pressing issue.
Anthony notes that Ghana’s inflation stood at 23.8% in December 2024 and has since declined in the first four consecutive months in 2025. Data from the Ghana Statistical Service indicates that, the inflation rate for May 2025 is 18.4%. This downward trend signals growing macroeconomic stability and renewed hope for economic recovery. He goes on to explores some key indicators shaping Ghana’s improving inflation outlook – ranging from monetary tightening to currency appreciation and fiscal reforms.
Anthony begins by highlighting the Bank of Ghana’s recent monetary policies as the key driver to the decline. To combat the persistent inflation, the Bank of Ghana in March 2025 increased the interest rate to 28%. This move was very clear and is intended to reduce liquidity and control inflationary pressures. He added, a high interest rate makes borrowing more expensive, savings become more attractive which reduces spending and investment in the economy. As spending in the economy declines, demand for goods and services reduces. This reduces pressure on prices and lower demand which eventually brings inflation down. Anthony emphasized that a higher interest rate makes the Ghanaian cedi stronger. Thus, imported goods become cheaper and cost of living become very affordable, leading to decrease in inflation.
Again, Anthony made a remarkable point by indicating that the decline in inflation is tied to the cedi appreciation. The cedi has appreciated nearly 33% between January to June 2025. The impact of the currency’s strength has brought stability in the prices of goods and services. Unlike the rapid price increment experienced over the past 2 years, we are now seeing prices of goods and services either decreasing or remaining stable for a longer period. Anthony highlights that, the strength of the Ghanaian cedi has made the cost of import cheaper. These lower businesses input costs and reduce the prices of goods and services. This increases the real purchasing power of consumers, supports price stability in the economy and increases competition from cheaper imports.
Anthony Kwesi Ashun, who is a MBA graduate in the United States of America stated that, In a bid to curb inflation and restore fiscal discipline, the Ghanaian government, under its IMF support program, has adopted a strategy of expenditure reduction. To help curb inflation and reduce spending, the government has cut expenses like non-essential international travels, reduction in the number of ministries, discontinuing of overlapping programs and budget cut to the office of the president. “These measures have effectively limited money supply in the economy, discouraged excess spending, and created a more stable investment climate,” Anthony observes.
Explaining further, he said these fiscal consolidations have made the currency stable, boosted investors’ confidence and contributed significantly to the country’s economic recovery.
He concludes by stating, the continuous dip in Ghana’s inflation highlights a combination of disciplined fiscal management, strategic currency stabilization measures and effective monetary policies. The convergence of cedi appreciation, Bank of Ghana’s tight monetary policies and reduced government spending have all been essential in reducing the pressure on inflation. These are deliberate and strategic economic management measures. With these policy actions and sustained reform implementation, Ghana’s economy is on a perfect path toward a long-term price stability and economic resilient.