The Bank of Ghana (BoG) has projected that headline inflation will remain within the lower bound of its medium-term target of 8 percent plus or minus 2 percent, reinforcing confidence that the country’s disinflation process is firmly on track.
The outlook reflects the combined impact of an appropriate monetary policy stance, ongoing fiscal consolidation, strong sterilisation efforts, and the maintenance of adequate reserve buffers.
According to the Central Bank, these policy anchors are expected to continue restraining price pressures, even as the domestic economy navigates residual risks from both local and external sources. The projection marks another positive signal to households, businesses, and investors who have closely watched inflation dynamics following recent macroeconomic adjustments.
Headline inflation continues downward trend
Headline inflation has shown a clear and sustained downward trajectory in recent months. Data from the Bank of Ghana indicate that inflation declined to 8.0 percent in October 2025 from 9.4 percent in September 2025. The easing trend persisted through November and December 2025, further strengthening the case for price stability.
Currently, Ghana’s inflation rate significantly dropped to 5.4% year-on-year in December 2025, its lowest in years, marking a major turnaround from rates above 20% in late 2024, primarily due to falling food and non-food prices, signaling increasing price stability.
The Central Bank noted that the continued moderation reflects easing supply constraints, improved policy coordination, and the cumulative effects of earlier tightening measures. This trend has been crucial in restoring purchasing power and stabilising expectations across the economy.
The decline in headline inflation also suggests that previous shocks, including elevated food prices and exchange rate pressures, are gradually dissipating. This has created a more predictable pricing environment, which is essential for economic planning and long-term investment decisions.
Core inflation shows deeper easing
Beyond headline numbers, underlying inflationary pressures have also softened. The Bank of Ghana’s core inflation measure, which excludes energy and utility items from the consumer basket, declined sharply to 7.4 percent in October 2025 from 8.8 percent in September 2025.
This reduction is significant because core inflation provides a clearer picture of demand-driven price pressures. Its decline signals that inflation is no longer being driven by broad-based increases across goods and services but is instead moderating at a more fundamental level.
The easing of core inflation supports the Central Bank’s assessment that its policy measures are effectively containing second-round effects and preventing temporary price shocks from becoming entrenched.
Inflation expectations remain anchored
The Bank of Ghana also highlighted that inflation expectations remain well anchored. Surveys conducted among banks, businesses, and consumers indicate broad confidence that inflation will continue to ease in line with official projections.
Anchored expectations play a critical role in sustaining disinflation. When economic agents believe that prices will remain stable, wage demands, pricing decisions, and contract negotiations tend to align with that outlook, reducing the risk of self-fulfilling inflationary spirals.
The Central Bank attributed this stability in expectations to clear communication, policy credibility, and consistent implementation of monetary and fiscal measures. These factors have helped rebuild trust in macroeconomic management.
Policy discipline underpins outlook
The projection of inflation staying within the lower bound of the medium-term target is underpinned by what the Bank of Ghana described as disciplined policy execution. On the monetary front, the Central Bank has maintained an appropriate stance, supported by strong liquidity management and sterilisation operations.
On the fiscal side, ongoing consolidation efforts have helped reduce excess demand pressures and supported overall macroeconomic stability. The Central Bank also pointed to adequate reserve buffers as a key line of defence against external shocks, particularly those that could affect the exchange rate and import prices.
Together, these measures form a coordinated policy mix aimed at sustaining the disinflation process while supporting economic recovery.
Risks remain but outlook stays positive
Despite the encouraging outlook, the Bank of Ghana cautioned that some upside risks to inflation remain. Potential upward adjustments in utility tariffs could feed into consumer prices, while spillover effects from tariff-related price pressures in the United States could transmit through global trade and commodity channels.
However, the Central Bank expressed confidence that these risks can be managed within the existing policy framework. It expects that continued policy discipline, strong sterilisation efforts, and fiscal consolidation will help contain any temporary pressures that may arise.
The Bank emphasised that it remains vigilant and ready to respond to evolving conditions to ensure that inflation stays aligned with its medium-term objective.
Implications for businesses and households
The sustained easing of inflation has positive implications for the broader economy. For households, slower price increases translate into improved real incomes and greater predictability in day-to-day expenses. For businesses, a stable inflation environment supports planning, investment, and access to credit.
Lower and more stable inflation also creates space for a gradual easing of financial conditions over time, provided the disinflation trend remains intact. This could support economic growth while preserving macroeconomic stability.
As inflation continues to track within the lower bound of the target range, the Bank of Ghana’s outlook reinforces the message that disciplined policy coordination is yielding tangible results.
With headline and core inflation both trending downward and expectations firmly anchored, the Bank of Ghana’s projection points to a period of sustained price stability. While risks remain, the Central Bank’s confidence in its policy framework suggests that Ghana’s disinflation journey is entering a more durable phase.
The coming months will be critical in consolidating these gains, but for now, the outlook signals renewed macroeconomic stability and a stronger foundation for growth.
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