BoG Projects Inflation to Hit 12% by End-2025, Anchored by Cedi Stability and Falling Fuel Prices
The Bank of Ghana (BoG) has projected that headline inflation could decline to around 12.0% by the end of 2025, with further moderation towards the medium-term target of 8 ± 2%, contingent on prevailing macroeconomic conditions and easing inflationary pressures.
The Central Bank’s May 2025 Monetary Policy Report indicates that while inflation remains susceptible to both upward and downward risks, the balance of risks is now tilted to the downside.
According to the report, key upside risks include residual effects of past food supply shocks, global supply chain disruptions, and rising geopolitical trade tensions, all of which could exert renewed pressure on consumer prices. However, the BoG expects these factors to be outweighed by more favourable developments.
“We expect these upside risks to be outweighed by the stability in the exchange rate and the falling crude oil prices, which is expected to lead to a significant fall in ex-pump prices feeding into lowering transport fares,” the report stated.
The BoG cited the Ghana Private Road Transport Union’s (GPRTU) recent announcement of a 15% cut in transport fares on May 26, 2025, as a significant contributor to easing inflationary pressures, particularly within the food and non-food components of the Consumer Price Index (CPI).
Additional disinflationary factors highlighted include anticipated downward reviews in utility tariffs and mounting pressure on trader groups, such as the Ghana Union of Traders Association (GUTA), to reduce prices in tandem with improved macroeconomic conditions.
The Central Bank also observed signs of inflation expectations becoming re-anchored, aided by ongoing fiscal consolidation in line with the 2025 national budget.
Inflation for May 2025 fell sharply to 18.4%, marking the fifth consecutive monthly decline. The latest drop was driven primarily by reduced transport fares and a fall in non-food inflation, reinforcing the Bank’s cautious optimism about the path of disinflation.
The BoG’s latest projection suggests a more favourable inflation outlook, supported by stabilising macro fundamentals, although vigilance is expected to continue amid lingering global uncertainties.
