The pace of disinflation in Ghana is expected to quicken in the months ahead as tighter monetary policies and tax reliefs begin to take effect in April 2025.
According to IC Insights, the latest decline in annual inflation is a positive sign.
“We note that the cooling impact of the 100 basis points hike in the policy rate to 28.0% and the intensified liquidity mop-up is yet to be fully reflected in price dynamics. Additionally, Ghana’s President assented to the Bill to repeal the E-levy Act on 2nd April 2025, partly easing the tax regime and potentially slowing price increases,” the report stated.
“These complementary fiscal and monetary policy measures boost our optimism for faster disinflation in the months ahead, especially with the May 2025 inflation print expected on 4th June 2025,” it added.
IC Insights also highlighted early indications of favorable weather conditions as the planting season begins, and noted that the approval of the 2025 fiscal measures provides timely agricultural support, with benefits expected to be realized during the crop harvest in the third quarter of 2025.
For April 2025, IC Insights anticipates a 70 basis points decline in the annual inflation rate to 21.7%, as the stable Ghanaian cedi and tighter policy regime help tame demand pressure. However, supply-side constraints, particularly with food items, may nudge month-on-month inflation up to 1.2%.
Ghana’s annual headline inflation surprised to the downside in March 2025, posting a third consecutive month of decline. This suggests a strengthening pace of disinflation each month.
Headline inflation declined by 70 basis points to 22.4% year-on-year in March 2025, marking the lowest level in four months. This development somewhat dampens the renewed post-Monetary Policy Committee concerns about a potential upturn in domestic yields.