News Guide Africa

Tag: Ghana Inflation

  • Ghana’s building inflation holds steady at 2.2% …as BoG tightens real estate controls

    Ghana’s building inflation holds steady at 2.2% …as BoG tightens real estate controls

    By Adnan Adams Mohammed

    Developers and homebuilders across Ghana are experiencing a rare period of cost predictability as the country’s building materials inflation held completely steady at 2.2 percent for the month of April.

    The structural stability offers a massive breather to a sector historically plagued by volatile import costs and sharp pricing surges.

    However, as physical input costs stabilize, the regulatory landscape is shifting dramatically. The Bank of Ghana (BoG) has announced a major policy tightening cycle, rolling out rigorous, automated property and identity checks designed to permanently root out fraud, money laundering, and speculative distortions in the commercial real estate sector.

    Macro stability lowers financial risks for developers

    The latest data from the Ghana Statistical Service (GSS) indicates that the 2.2 percent baseline represents one of the most stable structural runs for the construction sector in recent memory. The stabilization is primarily driven by a steady domestic currency, which has kept the landing costs of imported finishing materials, electrical fixtures, and machinery tightly contained.

    Reviewing the data, a senior real estate analyst at a prominent Accra-based investment firm noted that cost predictability will allow developers to finally resume stalled residential projects without fear of sudden budget overruns.

    “A steady 2.2 percent building inflation rate is exactly the signal the market needs,” the analyst stated. “For years, contractors had to bake massive, arbitrary contingency premiums into their construction bids just to protect themselves against price spikes in cement, iron rods, and roofing sheets. With inflation flat-lining at this low baseline, developers can price their projects accurately, pass those savings on to buyers, and confidently break ground on new mid-market housing developments.”

    Government Statistician, Alhassan Iddrisu, speaking at the release of the latest Prime Building Cost Index (PBCI) report last week indicated that, the PBCI rose to 136.1 in April 2026 from 133.2 in April 2025. This means the average cost of building materials increased by 2.2 percent over the one-year period.

    On a month-on-month basis, prices of building inputs increased by 1.5 percent between March and April 2026.

    The report identified glazing, plumbing, roofing sheets and electrical works as the major drivers of inflation in the construction sector. Glazing recorded the highest year-on-year inflation of 16.2 percent, followed by plumbing at 14.5 percent and roofing sheets at 13 percent.

    Central bank takes aim at dirty money in real estate

    While physical construction conditions improve, the central bank is aggressively moving to sanitize the financial side of the property market. Addressing corporate leaders and compliance officers at an extractive and financial governance forum, a high-level representative from the Bank of Ghana revealed that the real estate sector has increasingly been flagged as a primary destination for illicit funds and fraudulent transactions.

    To counter this, the BoG is mandating deep integration between commercial banks, the Lands Commission, and state identity databases to automatically verify the origin of funds used in high-value property acquisitions.

    “The Bank of Ghana is pushing for significantly stronger property checks to reduce fraud and eliminate illicit financial flows in the real estate sector,” Deputy Head of the Collateral Registry Department, Mrs. Rosemary Akabutu, stated during a policy brief. “We can no longer tolerate an environment where individuals can move massive, unverified volumes of cash into luxury residential properties without clear audit trails. By enforcing rigorous, data-driven identity matching and source-of-wealth checks across all financial institutions, we are protecting genuine investors and stabilizing property valuations from artificial inflation.”

    The central bank emphasized that these automated checks will require banks to cross-reference every major property transaction against the national Ghana Card database and the Registrar General’s beneficial ownership profiles to expose individuals using complex corporate shells to conceal ownership.

    Contractors welcome cost stability but urge credit easing

    On the ground in industrial hubs like Tema and Kumasi, local contractors are praising the flat input costs but warning that high commercial lending rates still restrict broad-based sector growth. While materials are affordable, borrowing capital to buy them remains an expensive hurdle for indigenous firms.

    “We are incredibly relieved that the prices of core materials like cement and steel have held steady through April,” an executive member of the Association of Ghana Industries (AGI) Construction Sector remarks. “It means we can honor our existing contract delivery timelines without cutting corners. But to truly unlock the building industry, the central bank’s regulatory tightening must be balanced with measures that encourage commercial banks to lower construction credit rates. Stability in material prices is excellent, but we also need affordable financing to build at scale.”

    With building material inflation expected to maintain its stable path through the next quarter and the central bank’s anti-fraud frameworks slated for full operational enforcement by July, industry experts agree that Ghana’s building sector is entering a highly disciplined, institutional era defined by transparent capital and predictable costs.

     

     

     

     

     

     

     

     

     

  • Ghana’s banking sector remains solid as inflation plummets to record 3.3%

    Ghana’s banking sector remains solid as inflation plummets to record 3.3%

    By Adnan Adams Mohammed

    A comprehensive stress test by the Bank of Ghana (BoG) has confirmed that the nation’s banking sector remains “robust” and resilient against adverse macroeconomic shocks, even as the country celebrates a historic drop in inflation to 3.3%.

    The dual announcement, made by the central bank last week week, paints a picture of an economy in the midst of a significant “reset,” characterized by a surging currency and a banking industry bolstered by strong capital buffers.

    In a report released on March 4, the BoG revealed that its January 2026 stress test showed banks are well-positioned to handle economic volatility. This strength is attributed to three primary factors:

    Strong Capital Buffers: Ongoing recapitalization efforts have improved the industry’s solvency.

    Large Government Holdings: Banks have strategically shifted portfolios toward government instruments.

    Improving Macro Environment: A more stable economic backdrop is supporting asset growth and deposit flows.

    Despite the positive outlook, the central bank issued a cautionary note regarding “core liquidity” and the quality of assets. While Non-Performing Loans (NPLs) have moderated, they remain an “upside risk” that requires close monitoring. The BoG expects the industry outlook to remain stable, provided banks meet the recapitalization deadline set for the end of March 2026.

    The “price” of 3.3% inflation

    The banking sector’s resilience is mirrored by a dramatic cooling of the economy. Governor Dr. Johnson Asiama disclosed that inflation fell to 3.3% in February 2026 a sharp contrast to the 23.1% recorded in February 2025.

    Dr. Asiama attributed this success to “prudent management,” specifically the sharp 40% appreciation of the cedi and aggressive “sterilization” measures to mop up excess money from the system. However, the Governor was candid about the financial toll these successes took on the central bank’s balance sheet in previous years.

    “This was delivered at a cost,” Dr. Asiama explained. “The losses recorded in 2024 and 2025 must be interpreted within the proper economic context. We must ask: what has been the real benefit to the economy? We have achieved historically low inflation and a stable currency.”

    2026: A year of recovery

    Looking ahead, the Governor expressed high confidence that the era of central bank losses is over. With inflation hitting record lows, the cost of “sterilization” (monetary policy interventions) is expected to drop significantly. Furthermore, the associated costs of the Gold for Reserves programme have been slashed by half, with the government set to absorb remaining pressures from “Goldbod.”

    “In 2026, the cedi won’t drop by that much again, hence the losses will not be repeated,” Dr. Asiama maintained.

    As the banking sector prepares for its final recapitalization push this month, the combination of a stable currency and record-low inflation suggests that Ghana’s financial foundations are firmer than they have been in years.

    Key Economic Indicators: February 2026

    Indicator Current Rate Change from Feb 2025

    Inflation 3.3% Down from 23.1%

    Cedi Value +40% Appreciation Record performance

    Capital Adequacy (CAR) Improved Trending Upward

    Industry Outlook Stable Contingent on recapitalization

     

     

     

     

     

  • BoG plans for a more liquid economy in 2026

    BoG plans for a more liquid economy in 2026

    The Bank of Ghana has declared on its website that it is set to scale back its mopping of liquidity in 2026 if inflation and exchange rate pressures remain contained.

    This stance will be welcomed by businesses and households alike across Ghana who fret that even though the sharp fall in consumer price inflation and accompanying lowering of credit financing costs have been beneficial to them, this has been achieved in part by depriving them of direly needed liquidity, as the central bank has sought to minimize demand-pull inflation for goods, services and foreign exchange. This has been achieved primarily by its issuance of short term Bank of Ghana bills to conduct its open market operations through liquidity mop-ups, as well as stringent reserve requirements for commercial banks.

    However the central bank has also warned that it will only allow liquidity growth cautiously, and only as macro-economic conditions permit, stressing that while it is “currently confident in the disinflation path and fiscal discipline… its priority is to keep inflation expectations well-anchored, using both interest rate policy and liquidity absorption tools.”

    Economic operators hail the BoG for its pivotal role in bringing inflation down from 23.8% at the start of the year, to a long term low of 6.3% for November, and for cutting the Ghana Reference Rate (which effectively serves as the base lending rate for all the commercial banks) from 29.72% at the turn of the year to 17.86% by October.

    However they accuse it of doing this by mopping up much of the liquidity in the economy, thereby depriving them of the means to execute many of their needed economic plans and transactions.

    Indeed, total liquidity in the economy measured by M2+ – grew by just 6.1% over the first ten months of 2025, having started the year at GHc329.8 billion and reaching GHc351.4 billion by the end of October.

    Even more instructively it declined to a trough of GHc325.0 billion in June; and October’s level was lower than September’s GHc354.0 billion.

    Indeed, the BoG insists that easing monetary policy through interest rate cuts does not necessarily imply that the monetary policy stance is not tight. It points out that with high real interest rates, as is the case in Ghana, it can sufficiently reduce the monetary policy rate and still maintain a tight monetary policy stance thus arguing that the recent sharp reductions in the monetary policy rate by the Monetary Policy Committee (cumulatively from 28% to 18% between July and November) are therefore fully consistent with the IMF’s recommendation to maintain a tight monetary policy stance.

    Now however central bank officials are considering allowing increased liquidity in the economy next year. This would support the achievement of government’s 4.8% economic growth target for 2026 the World Bank projects a lower 4.3% but Fitch Ratings projects it at a higher 5.9% – this coming on an expected growth of at least 4.5% for 2025.

    If the Bank of Ghana permits liquidity whether measured by broad money (M2+), or overall domestic credit to grow at a faster pace in 2026 than it did in 2025, the implications would be far-reaching. Higher liquidity can support the post-stabilization growth agenda of the Mahama administration, especially under policies such as the 24-Hour Economy and the stimulus measures for export diversification.

    However, it also poses risks for inflation, exchange-rate stability and debt sustainability, especially given Ghana’s recent experience with macro-economic volatility.

    A more liquid financial environment would generally push interest rates downward, particularly lending rates, which remain a major constraint to private-sector expansion.

    Lower financing costs would help manufacturers, agribusiness firms and service providers invest in capacity expansion, adopt new technology and scale up working capital which could boost output, employment and domestic value-addition in line with government objectives.

    Besides, increased liquidity usually translates into reduced borrowing costs for households as well, making personal loans and consumer financing more affordable, raising household consumption and possibly stimulating real estate and retail activity.

    Banks would gain from stronger credit demand and improved loan growth after years of tight credit conditions following the Domestic Debt Exchange Programme (DDEP).

    Non-bank financial institutions may also find easier access to wholesale funding in a more liquid market which also typically reduces the yield curve on public treasury instruments, lowering the government’s domestic borrowing costs.

    However, these advantages would be accompanied by considerable risks to Ghana’s hugely impressive economic turnaround accomplished in 2025.

    The most immediate risk from excessively rapid liquidity growth is rising inflation. If the increase in money supply outpaces real economic activity especially in a supply-constrained economydemand-pull inflation could resurface. Given Ghana’s recent success in gradually lowering inflation to single digits from a high of 54.5% in 2023, any reversal would erode purchasing power and undermine public confidence in monetary policy. However BoG Governor Dr Johnson Asiama is confident the central bank can navigate its way around this. “The MPC has shown that data-driven policy decisions and the careful calibration of the policy rate can effectively deliver price stability. Relying on these lessons, the Committee aims to keep inflation firmly within the medium-term target band of 8 ± 2 percent in 2026.

    Higher liquidity could also lead to increased imports and speculative foreign exchange demand, putting pressure on the cedi, a situation which indeed arose during the third quarter of this year, thus persuading the BoG to aggressively mop up liquidity in September, ahead of its US$1.15 billion forex market intervention in October.

    A weakening currency would raise the cost of imported goods and fuel, feeding into inflation and potentially triggering a destabilizing feedback loop.

    If liquidity growth appears inconsistent with inflation-targeting principles or IMF programme commitments, investor confidence could weaken. This may result in higher risk premiums, reduced foreign portfolio inflows and greater volatility in domestic bond markets.

    Furthermore, while credit growth can strengthen banks, overly rapid expansion may compromise credit quality. Non-performing loans could rise if lending outpaces proper risk assessment.

    Economists and monetary policy analysts agree that allowing faster liquidity growth in 2026 could support growth, investment and job creation across multiple stakeholder groups. But it must be carefully calibrated to avoid triggering inflation, currency instability and policy credibility concerns.

    The Bank of Ghana has already put in place a framework for micro- management of liquidity by reintroducing very short term 14 day bills for its open market operations The challenge for the Bank of Ghana is striking a balance between stimulating economic activity and protecting hard-won macroeconomic stability gains.

     

    By Toma Imirhe

     

     

     

     

     

     

     

  • Inflation drops to 11.5%, lowest in four years

    Inflation drops to 11.5%, lowest in four years

    The Ghana Statistical Service (GSS) in its Consumer Price Index bulletin (consumer inflation) for August 2025 recorded a continued downward trend, reaching a four-year low of 11.5 percent.

    This marks the eighth consecutive month of decline, slowing from 12.1 percent in July 2025.

    The Ghana Statistical Service (GSS) attributes the drop to a significant slowdown in the prices of food and other essential items, signaling a decrease in the inflationary pressures that have been impacting the economy.

    Government Statistician, Dr. Alhassan Iddrisu, said the figures highlight how the cost-of-living situation is gradually easing.

    “Inflation is falling steeply. Prices rose by 11.5 percent in August 2025, down from 12.1 percent in July, the lowest in almost four years, and it marks the eighth month in a row of decline” he said.

    On a month-to-month basis, the GSS reported that prices actually fell.

    “Overall, prices fell by 1.3 percent between July and August, providing some relief for households,” Dr. Iddrisu added.

    Food inflation eased to 14.8 percent, while non-food inflation moderated to 8.7 percent, compared to 9.5 percent in July.

    Inflation for goods also slowed, dropping from 14.2 to 13.9 percent in July, with prices of goods falling by 1.6 percent between July and August 2025.

    The latest figures reflect a steady decline in price pressures, raising hopes of sustained relief for consumers across the country.

  • Analysts predict single digit inflation by Q3 amidst threat from utilities price hike

    Analysts predict single digit inflation by Q3 amidst threat from utilities price hike

    Ghana’s inflation has taken a sharp nosedive in the past two months, falling from 21.2 % in April to 13.7 % in June, after recording 18.4 % in May.

    Based on the recent development, analysts predict that inflation rate could return to single digit by September 2025 beating the government’s own target of mid-2026.

    The 13.7% June inflation is the lowest since December 2021 and also is nearing the end-year target of 11.9%.
    The Head of Finance at Merban Capital attributes the downward trend to a combination of factors, including sustained cedi stability, a tight monetary policy stance by the Bank of Ghana and falling yields on the Treasury bill market, which continue to absorb excess liquidity from the system.

    “All these three factors actually contributed towards the disinflationary pressure. And this can continue even into the third quarter, where we may end up hitting single digit inflation”, Nelson Cudjoe Kuagbedzi noted in a radio interview last week.

    “As I did indicate, 11.9% is the target for the year. But having achieved 13.7% as at second quarter, we may end up hitting single digit by September 2025. And this is good news for businesses, good news for individuals, and good news for the government. This inflation rate is going to provoke a lot of activity within the money market”, he added.

    However, the Ghana Statistical Service is concerned about price pressures from rent, electricity, refuse disposal, charcoal, and yam which remain the top five price pressure points driving inflation.

    Unexpectedly, refuse disposal, despite its small weight of just 0.5% in the inflation basket, saw a staggering year-on-year price surge of 130.9%, making it one of the biggest contributors to the overall rate.

    Meanwhile, Government Statistician Dr. Alhassan Iddrisu, has noted that sustained disinflation presents a crucial opportunity to shift from reactive price controls to more structural solutions.

    He is urging businesses to rethink their sourcing models, noting that: “With inflation on locally produced goods declining faster than imported ones, businesses can reduce exposure to global supply shocks by increasing local sourcing, especially for food, packaging, and logistics inputs.”

    “Businesses could practice strategic pricing, not sharp increases, given the disinflation and even month-on-month deflation as consumers are more price-sensitive.”

    In the face of rising food prices with staples like yam still among the top inflation drivers GSS also recommends changes in household purchasing behavior:

    “Households should lean into bulk purchases of staples, buy local produce where possible, and favor in-season vegetables, cereals, and proteins, which are experiencing sharper price drops.”

    As regional disparities in inflation persist, Dr. Iddrisu emphasized that economic policy must become more targeted:

    “Tailor social protection and economic policy by Region as blanket policies will not be effective given wide regional disparities in inflation.”

    The Government Statistician, while addressing a press conference, attributed the decline to what he described as a significant reduction in inflationary pressures that have weighed on the economy in recent months.

    “For the first time in a while, we are recording a month-on-month deflation of 1.2 percent between May and June, suggesting a real and sustained shift in price levels,” Dr. Iddrisu.

    Food inflation fell by 6.5 percentage points to 16.3 percent, down from 22.8 percent in May, while non-food inflation also eased to 11.4 percent from the previous 14.4 percent.

    However, regional disparities remain stark.

    The Upper West Region recorded the highest inflation rate at 32.3 percent, largely driven by rising food and utility costs. In contrast, the Bono Region posted the lowest at 8.4 percent.

    Dr. Iddrisu called for the use of more localized, granular data in policy planning to help address these regional imbalances and sustain the national disinflationary trend.

    The consistent decline over the past six months offers a hopeful sign for policymakers and businesses alike, especially as government targets single-digit inflation by early 2026

    By Adnan Adams Mohammed

  • Monetary and fiscal policies pushing Sub-Saharan Africa inflation downwards 

     

    Inflation trend

    Adnan Adams Mohammed

     

    Last week, the World Bank Africa Pulse Report, indicated a declining inflation across the Sub-Saharan Africa nations attributing it to the effects of monetary tightening and fiscal consolidation. 

     

    Also, the steady decline in commodity prices from their highs in 2022 contributing to the downwards inflationary trend as projected over the next three years. 

     

    According to the report, inflation in the subregion is expected to be 4.8 percent in 2024, down from 7.1 per cent in 2023. It is predicted to decline further to 4.6 percent in 2025 and 4.5 percent in 2026.

     

    The report notes that the path of convergence to inflation targets will continue across African countries although at different speeds, and it may hit some bumps along the road if upside risks to inflation materialise.

     

    The slowdown in inflation rates, it observes, appears to be broad-based: about 70% of the countries in the region are expected to have lower inflation in 2024 (compared to the previous year), and this proportion will increase to 80% in 2025.

     

    Yet, inflation rates are expected to be higher than they were in the pre-pandemic period for about 70% of Sub-Saharan African countries.

     

    Additionally, inflation among metal exporters is expected at 8% in 2024 and 6.4% in 2025, while that of oil exporters is set at 6.5% in 2024 and 3.3% in 2025.

     

    High-frequency data suggest that central banks in Sub-Saharan Africa have made significant progress in the fight against inflation.

     

    From its highest median rate of 9.9% year-on-year in October 2022, inflation decelerated sharply to 4.6% by June 2024.

     

    However, the variability of inflation rates across countries remains high—with an interquartile range of about 12 percentage points this year, the report said.

     

    This implies that some countries still face high inflation rates (double-digit rates) and the deceleration of inflation varies across countries in the region.

     

    By June 2024, about 70% of the countries in Sub-Saharan Africa (30 of 43) had inflation rates that were low and declining, while the inflation rate for 13 countries (30%) was still high.

     

    Nominal exchange rates appear to have stabilised by the end of June 2024, although at different levels across these two groups of countries.

     

    Factors driving inflation include both external shocks (global supply chain disruptions) and internal shocks (such as macroeconomic imbalances, fragility, and debt hangover, among others).

     

    These shocks not only create inflationary pressures but also jeopardise the stability of exchange rates.

     

    At the same time, food inflation remains high and slightly volatile, while currencies have weakened sharply among countries with high inflation.

     

    During this period, supply chain problems as a result of the war in Ukraine accelerated inflation from the second quarter of 2022.

     

    Disruptions in the production of agricultural goods due to domestic conflicts and extreme weather events (droughts in Eastern Africa and the Sahel as well as floods in Southern Africa) also contributed to accelerating inflation in 2022, reaching peak levels in the first quarter of 2023.

     

    The nominal exchange rates for the two groups of countries remained stable until February 2022 for the low-inflation countries and May 2022 for the high-inflation countries.

     

    Currencies for the two groups weakened because of inflationary pressures arising from global geopolitical conflict.

     

    The exchange rates of low-inflation countries depreciated until the fall of 2022 and then started gradually appreciating. The currencies of high-inflation economies depreciated further.

     

    After reaching their peaks in early 2023, food and headline inflation began cooling—although the pace of disinflation varied markedly across countries.

     

    In low-inflation countries, inflation increased at a slower pace than in high-inflation countries throughout 2022, while headline and food inflation started to decline gradually and protractedly in January 2023.

     

    This group— which accounts for 70% of the countries in the region—is stabilising (headline and food) inflation at rates closer to their targets. The disinflation among low-inflation countries has also been accompanied by a strengthening of their currencies.

     

    For the group of high-inflation countries, headline and food inflation appear to have peaked and stabilized at higher levels.

     

    https://newsguideafrica.com/ editorial team acknowledge this as a welcoming news to the health of the economy and general standard of living as cost of living is expected to be steady and predictable over a period of months. 

     

    This helps in better economic and household expenditure planning. 

     

     

  • Traders caution gov’t over drop in inflation 

    Inflation

     

    Adnan Adams Mohammed

     

    The Ghana Union Traders Association (GUTA) has cautioned the government against complacency despite the recent decline in inflation.

     

    Traders, who are hardly hit with inflation surges as it erodes working capital, have called for continued vigilance and proactive measures, although, acknowledging the positive progress of inflation from 54.1% in December 2022 to 26.4% in November 2023.

     

    The call comes at the time the Finance Minister, Ken Ofori-Atta, is celebrating the collaboration between the Treasury and the Bank of Ghana which has led to the halving of inflation from a peak of 54.1% to 26.4%. 

     

    “We should not be complacent, especially when the second tranche of the IMF loan hasn’t come in. If it comes within time, we can sustain the gains we have gotten so far. We must be serious in managing our monetary business to maintain the current inflation rate,” the President of GUTA, Dr. Joseph Obeng, said in an interview last week.

     

    “The inflation was at 54.1%, the exchange rate was very high. In the last quarter of 2022, we experienced large rates of depreciation. When the first tranche of the IMF loan of $600 million came, we experienced long-term stability of the cedi. I think that is what is doing the magic of pulling the money down. Inflation has been at 54.1%, and it’s seeing a current decline of 26.4%. Once inflation is declining, we should be seeing the effects of that in the market. Are we seeing that?”

     

    He anticipated a lower monetary policy rate to help cushion businesses.

     

    “We should expect the monetary policy rate to come down, along with inflation so that the cost of borrowing and other costs of doing business can come down too. Then inflation can come down to the barest minimum to help both the consuming and the trading public.”

     

    Finance Minister Ken Ofori-Atta recently attributed the consistent decline in inflation to the government’s dedicated efforts in restoring macroeconomic stability.

     

    At the Bank of Ghana’s End-of-Year Cocktail last week, Mr. Ofori-Atta said: “Together, we have strived to reset our financial architecture”.

     

    “And despite the challenges over the last three years, I am proud that we have ‘turned the corner’ toward a more robust and transformed economy”, he added.

     

    Mr Ofori-Atta said: “Indeed, amidst these trials, our united front in managing the Bank of Ghana’s balance sheet has been nothing short of heroic.”

     

    “More importantly, the Ghana Statistical Services (GSS) reported that inflation has slowed down to 26.4% in November 2023 from 35.2% in October 2023”, he pointed out, adding: “In effect, the Bank and the Treasury’s collaborative efforts have halved inflation (from 54.1% in December 2022) in under 12 months”.

     

    Mr Ofori-Atta said while it is a welcome news that prices are no longer rising as quickly, “We know many people continue to face severe cost of living pressures. So, we must stay the course to continue to get inflation back down to single digits as quickly as possible”.

     

    He noted: “We must never forget that our work is vital not just for the present but also for the future of Ghana. And, so, though our journey is far from over, and the road ahead will require continued perseverance and unity, I am confident that we will not only prevail but also propel Ghana towards a more prosperous future”.

     

    Mr Ofori-Atta said 2024 should be a period in which “we must continue to push boundaries, work with equanimity, and dispel any cloud of nihilism to guarantee economic freedom and social mobility for all”.

     

    Also, the President, Nana Akufo-Addo commended the Bank of Ghana for its role as a reliable custodian of the nation’s finances, an efficient currency manager, and a vital lender of last resort.

     

    President Akufo-Addo highlighted the BoG’s pivotal role during the COVID-19 pandemic, citing the institution’s collaboration with commercial banks to institute a GHS3 billion credit and stimulus package. This initiative aimed to rejuvenate industries, particularly in the pharmaceutical, hospitality, and manufacturing sectors, yielding positive effects on the country’s economic growth.

     

    Recalling the challenges faced upon assuming office in 2017, President Akufo-Addo acknowledged the distressed state of the banking industry. He praised the BoG’s intervention under new leadership, emphasising the restoration of stability and sanity to prevent the collapse of the financial sector. The President noted the successful cleanup exercise, which safeguarded the funds of 4.6 million depositors and utilised GHS21 billion from government funds.

     

    In addressing the economic impact of the COVID-19 pandemic and the Russia-Ukraine conflict, President Akufo-Addo credited the BoG for playing a crucial role in restoring macroeconomic stability. He highlighted a significant drop in inflation from 54% in December 2022 to 26.4% in November 2023, as well as sustained stability in the exchange rate.

     

    Underscoring the BoG’s support for the government’s economic diversification and transformation process, its partnership with the International Monetary Fund (IMF) and the implementation of corporate governance measures to prevent future bank failures, ensuring a robust banking sector.

     

    While acknowledging the BoG’s contribution to the digitisation of the economy, emphasising the transformation of the payment system, and enhanced financial inclusion, the President called for stronger partnerships and enhanced policy coordination between the BoG and the Ministry of Finance to address current economic challenges and facilitate the desired economic transformation.

  • ISSER raises concern on high food import reliance… amidst suspension of new food import restrictive L.I 

     

    Adnan Adams Mohammed

     

    The Institute of Statistical, Social and Economic Research (ISSER) of the University of Ghana has raised concerns on Ghana’s high dependent on imports including staple foods like grains, meat and poultry to meet local demand.

     

    The institute said, such activity is posing severe risks of external shocks destabilising the economy.

     

    As contained in a report on the 2023 Mid-Year Budget Review released by ISSER fortnight ago, it indicated that, food items still dominate Ghana’s monthly import bill in the first half of 2023, led by produce from Asia and Europe cautioning that with high inflation already biting consumers from looming global recessions, unrest and climate pressures, further volatility in international food prices could have severe impact on Ghana.

     

    “Ghana is very dependent on food imports and highly vulnerable to external shocks.”- the report stressed.

     

    The researchers say self-sufficiency in key staple foods through increased domestic production should be a national priority.

     

    This requires concerted efforts by government and private sector players to bolster output and processing of items like rice, vegetable oils and fish where demand outstrips local supply.

     

    Strengthening intra-regional trade, particularly under the African Continental Free Trade Area is also identified as vital to improving food security and insulating African countries from global headwinds.

     

    However, government’s plan to restrict imports of food items in a Bill submitted to Parliament through the Trade Ministry have been suspended. 

     

    Parliament, last week, halted the presentation of the Legislative Instrument aimed to restrict the importation of 22 selected strategic products into the country.

     

    Acknowledging the significant impact such instruments can have due to their constitutional and legal implications, the Speaker of Parliament urged leadership to resolve the matters surrounding the regulation, taking into consideration concerns of industry players.

     

    The Minority caucus raised concerns about the regulation’s implications, prompting calls for further engagement with the Minister for Trade and Industry, K.T Hammond. 

     

    The Speaker, Alban Bagbin, emphasised the need for the minister to address these concerns before laying the Legislative Instrument before the house.

     

    “Try to resolve these matters before we move on because we are dealing with instruments. And you know the impact of these instruments; that is why I am saying we should try and resolve it.”

     

    “Laying of an instrument has nothing to do with numbers, but because of the nature of the instrument you laid and the constitutional and legal effects of the laying, you better meet and discuss and resolve the issues before we move on,” Mr. Bagbin said.

     

    When passed, the Instrument could help government to control imported food inflation which, for past years which have been driving the total inflation up. 

     

  • WB outcry worsening food security and poverty in Ghana due to untamed inflation 

     

    Adnan Adams Mohammed

     

    The World Bank has said Ghana’s hyperinflationary trend being experienced by economy since 2022 has heightened food security and poverty levels.

     

    The Bank is alarmed with the rate of increase in prices across all consumer categories, which are significantly impacting the living standards of Ghanaians, especially the poor.

     

    The latest Ghana Economic Update released by the World Bank, last week, took cognizance of how the Ghanaian economy is grappling with a severe inflation crisis that has unleashed devastating consequences on the vulnerable. It further indicated that, the erosion of purchasing power resulting from inflation has led to a decline in living standards for Ghanaian households.

     

    “In 2022, the minimum wage in Ghana saw a 10 percent increase. However, this increase was overshadowed by the staggering inflation rate, causing real incomes of minimum-wage workers to plummet by nearly 44 percent. Consequently, the average purchasing power of these workers declined by 15.7 percent throughout the year”,

     

    The report reveals that 20 percent of the population experienced a significant loss of purchasing power, amounting to 16.1 percent in 2022.

     

    “Surprisingly, the richest 20 percent also suffered a notable decline in purchasing power, losing 15.5 percent. While the wealthy lost more purchasing power in absolute terms, the impact was less burdensome compared to their total expenditure.”

     

    The Economic Update highlights that average prices for all Classification of Individual Consumption According to Purpose (COICOP) categories experienced a stark increase in 2022 compared to the previous year.

     

    While non-food inflation was notably high, at an average of 29 percent in 2022, food prices soared even higher, escalating by an average of 34 percent.

     

    This disparity has disproportionately affected the poor, who allocate a larger share of their budget to food and are thus more severely impacted by the rising prices.

     

    Simulations conducted in the report indicate that approximately 850 thousand Ghanaians were pushed into poverty in 2022 due to the combination of rising prices and the loss of purchasing power.

     

    Furthermore, food security in the country deteriorated considerably. The number of food insecure individuals jumped from 560,000 to 823,000 in the last quarter of 2022.

     

    By the end of the year, one-quarter of the population were classified as food insecure, a trend expected to persist into 2023.

     

    To combat the adverse effects of inflation on food security, the World Bank’s Ghana Economic Update highlighted several policy recommendations.

     

    “The government must prioritize investments in agriculture, including research, development, and technology transfer, to enhance productivity, reduce production costs, and improve food quality and safety. Diversification of income sources, improved connectivity, and market access can help households better cope with shocks and seize opportunities.”

     

    The report additionally emphasised the importance of investing in climate-smart agriculture initiatives.

     

    Furthermore, the Economic Update recommends allocating resources towards developing rural infrastructure, including better roads, irrigation channels, and improved primary education.

     

    To alleviate the immediate impact of high food prices on vulnerable households, the report emphasised the need to enhance social protection programs.

     

  • Businesses and transport operators expected to reduce prices

    Businesses and transport operators expected to reduce prices

    By: Memuna Asuma

    Players in the trade, commerce, industries and transport businesses are expected to reduce their market prices as inflation and forex exchange rates keep improving.

     

    Reacting to the current rate of inflation which dropped to 45% for the month of March 2023, the Government Statistician has indicated that the continuous drop in the prices of petroleum products and other goods and services are yet to reflect in transport fares. This is due to its slow impact on other factors of transportation, he noted.

     

    Although the drop in diesel and petrol prices for some time has been significant, it will translate into transport fares if spare parts and other component of the transportation sub-class record same reduction. However, Ghana Union of Traders Association (GUTA) has called on its members to respond positively to the improved economic position of the country and adjust prices accordingly.

     

    “Yes, we have seen some drops in diesel and petrol prices for the past few months. But one must bear in mind that other factors that makes up the component like the taxi cost and spare parts or materials are yet to get the impact of these reductions”,  Professor Samuel Kobina Annim said last week, at a press briefing.

     

    The rate of inflation for the month of March 2023 slowdown as a result of some historic deflation recorded in the Food and Non-alcoholic Beverage group during the period February 2023 and March 2023.

     

    Professor Annim believes that the Consumer Price Index has been consistent with the decline in inflation since the beginning of the year, a situation he attributes to many factors.

     

    Meanwhile, in a statement issued last week by GUTA, efforts by the government and the Bank of Ghana to bring down inflation and exchange rate are commendable, hence the call on its members to cut prices of goods.

     

    “GUTA, entreats all members of the business community to respond positively to the changing trend and adjust prices to reflect the exchange rate. We express our pleasure to the government and the Bank of Ghana for their efforts at bringing down inflation and exchange rate”.

     

    It urged government to continue with the efforts and take advantage of the reduction of the exchange rate to further reduce inflation and other costs of doing business in the country.

     

    It added that this could be achieved by adjusting customs valuation rate to reflect the current trend of the exchange rate.

     

    “We wish to urge government to continue with the efforts and take the advantage of the reduction of the exchange rate to further reduce inflation and other costs of doing business. Adjusting customs valuation rate to reflect the current trend of the exchange rate”.

     

    Last week, the cedi gained across the major trading currencies in the foreign exchange market following progress on Ghana’s negotiations with its bilateral creditors.

     

    It gained 10.27% week-on-week against the US dollar in the retail market to close at a mid-rate of ¢10.95 to one US dollar on Thursday, April 6, 2023.

     

    Also, inflation for March 2023 fall sharply to 45%, influenced by some deflation of items in both the Food and Non-Alcoholic Beverages group and Non-food inflation.