Ghana’s progress in bringing inflation under control is yet to deliver the financial relief many households desperately need, as high prices, stagnant incomes and limited employment opportunities continue to squeeze consumers’ purchasing power.
The Head of the Economic Division at the Institute of Statistical, Social and Economic Research (ISSER), Professor Fred Dzanku, has warned that the decline in inflation should not be mistaken for an improvement in the living conditions of ordinary Ghanaians.
Although inflation fell significantly in 2025 and remained within relatively low levels in 2026, many households are still struggling to afford essential goods and services. The situation raises fresh questions about how far the country’s improving economic indicators have translated into tangible benefits for citizens.
Ghana’s year-on-year inflation rate rose to 5.2% in September 2026 from 5.0% in August, highlighting a recent increase after months of easing price pressures.
Speaking on ISSER’s State of the Ghanaian Economy Report 2025, Professor Dzanku acknowledged the progress made in reducing inflation but argued that households continue to face substantial cost-of-living challenges.
Lower Inflation Has Yet to Bring Relief
Professor Dzanku explained that Ghana’s declining inflation rate represents an important economic achievement, but the country still compares unfavourably with many other sub-Saharan African economies.
“Even though we’ve done well in bringing down inflation considerably, still when you compare us with a typical sub-Saharan African country, our inflation rates are still higher, by sometimes about two percentage points.”
Professor Fred Dzanku
The difference has implications for household budgets, particularly as families continue to spend significant portions of their earnings on food and other necessities.
While prices may no longer be increasing as rapidly as they did during periods of high inflation, the cost of purchasing essential commodities remains a major concern.
This creates a difficult situation for households whose incomes have not increased sufficiently to match the cumulative rise in prices over recent years.
The concern is particularly significant for workers, traders and families with limited financial resources, who must manage everyday expenses even when their earnings remain unchanged.
Why Falling Inflation Does Not Mean Cheaper Goods
A central point in Professor Dzanku’s assessment is the distinction between lower inflation and falling prices, two concepts that are often confused in public discussions about economic recovery.
Inflation measures the rate at which prices increase over time. When inflation declines, prices generally continue to rise, but at a slower pace. Actual price reductions occur when the prices of goods and services fall.
Professor Dzanku illustrated the difference using rice, a staple food consumed by millions of Ghanaians.
He explained that a bag of rice that cost GH¢500 two years ago would not automatically become cheaper because inflation had declined. Instead, its price might rise to GH¢510 or GH¢520, rather than increasing by a much larger amount.
“So the price has not fallen, and that’s what households are concerned about. They are concerned about how much of the commodity they are able to purchase,” he said.
The example captures a challenge confronting many households. Even when the rate of price increases slows, consumers must still pay the accumulated higher prices of previous years.
A household that once purchased several bags of rice or other essential commodities with the same amount of money may now find that its budget covers significantly less.
Consequently, lower inflation can improve economic stability without immediately restoring the purchasing power households have lost.
Stagnant Incomes Deepen Household Hardship
Professor Dzanku argued that Ghana’s cost-of-living difficulties cannot be addressed through inflation reduction alone. Increasing household incomes through job creation and improved earnings must also become a priority.
His concern centres on the relationship between prices and incomes. When the cost of living continues to rise while wages and earnings remain stagnant, households experience a decline in their ability to maintain their standard of living.
“What we need to do really is to see how do we increase the incomes of households,” he said.
The call places employment creation and income growth at the centre of efforts to make Ghana’s economic recovery more meaningful to ordinary citizens.
While lower inflation can create a more predictable environment for businesses and consumers, its benefits may remain limited if workers cannot earn enough to meet their basic needs.
The situation also highlights the importance of creating productive employment opportunities and improving earnings, particularly for households that depend on daily wages and informal economic activities.
Professor Dzanku cautioned that households could remain financially worse off even when the pace of price increases slows, provided their incomes fail to keep up.
“If incomes are not increasing even at the rate at which prices are increasing, then even if the rate of increase in price is slower, households are still worse off.”
Professor Fred Dzanku
Ghana’s Economic Recovery Faces a Household Test
The ISSER economist’s assessment highlights a broader challenge for Ghana as policymakers seek to consolidate macroeconomic gains while improving living standards.
Lower inflation can support economic stability, improve planning and reduce uncertainty for households and businesses. However, these gains do not automatically translate into greater affordability or improved welfare.
The recent increase in inflation from 5.0% in August to 5.2% in September 2026 also underscores the need to sustain efforts to contain price pressures.
Ultimately, the impact of Ghana’s economic recovery will depend not only on headline inflation figures but also on whether households can afford more goods and services with their earnings.
Moreover, until income growth catches up with the accumulated cost of living, many Ghanaians may continue to experience financial hardship despite the country’s significant progress in reducing inflation.
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