- Dalex CEO Warns Businesses as Producer Price Outpace Ghana’s Low Inflation
Ghanaian businesses risk being lulled into a false sense of comfort by the country’s low consumer inflation numbers, even as production costs begin to rise more sharply across the economy, Joe Jackson, Chief Executive Officer of Dalex Finance, has warned.
Mr Jackson said the sharp slowdown in headline inflation should not be interpreted as proof that business conditions have become easier. Rather, he argued that the structure of cost pressures has changed, requiring firms to rethink strategies built during Ghana’s recent high-inflation cycle.
His warning comes at a time when consumer price inflation remains historically low but producer prices are beginning to move faster.
Consumer inflation rose only marginally from 3.20% in March 2026 to 3.40% in April and 3.70% in May. But producer price inflation accelerated more sharply, rising from 1.60% in March to 2.70% in April before jumping to 5.80% in May.
The divergence suggests that while consumers are not yet facing strong price increases at the retail level, businesses are beginning to absorb higher costs across the production chain.
He said the key question for business leaders is no longer whether inflation is generally rising, but whether their own operating costs are increasing faster than revenues.
If firms fail to recognise that shift early, they could see margins squeezed even in an economy where headline inflation appears subdued.
“The issue is not only what the consumer inflation figure says,” he argued. “The real question is whether the cost of running your business is rising faster than the income you are generating.”
That message is important because many businesses adjusted their pricing, borrowing and working-capital strategies during the high-inflation period, when prices were rising rapidly and firms could often pass on costs more frequently to consumers.
Consumer inflation is low, which limits the ability of firms to raise prices aggressively. But producer costs are rising, meaning businesses may be forced to absorb higher input, transport, labour, energy and supply-chain costs without being able to fully pass them on.
That creates a margin squeeze.
For manufacturers, traders, transport operators, retailers, food processors and service providers, the danger is that profitability may weaken quietly before the pressure becomes visible in headline data.
Mr Jackson therefore urged firms to monitor producer price trends more closely, describing the sharp jump between April and May as an early warning signal.
The producer price index is often viewed as a leading indicator because increases in production costs can eventually feed into consumer prices. But even before that happens, businesses themselves bear the cost pressure.
That makes the current producer inflation trend significant.
A move from 2.70% in April to 5.80% in May represents a clear acceleration in upstream costs. If sustained, it could force firms to make difficult decisions on pricing, staffing, credit terms, expenditure and inventory management.
Mr Jackson also pointed to external risks that could worsen the situation.
He warned that climate-related disruptions across West Africa could affect food production and constrain regional food supply. Any tightening in food availability could raise import costs, feeding into domestic prices and business input costs.
He also cited geopolitical tensions affecting global energy markets, warning that higher fuel prices could raise transport and logistics costs across the economy.
For Ghana, this risk is particularly important.
Fuel prices influence the movement of goods from farms to markets, imports from ports to warehouses, and distribution from producers to retailers. Even where fuel does not carry a heavy direct weight in consumer inflation, its indirect effect on business costs can be significant.
Higher fuel costs can also affect construction, manufacturing, haulage, mining services and agriculture.
Mr Jackson’s warning therefore goes beyond inflation statistics. It is a call for businesses to shift from expansionary optimism to disciplined risk management.
He advised firms to adopt a more defensive financial posture in the months ahead.
This includes avoiding excessive exposure to dollar-denominated borrowing, especially for companies whose revenues are mainly in cedis. Foreign-currency debt can become dangerous if the cedi weakens, because repayment obligations rise in local-currency terms even when sales do not increase.
He also urged businesses to shorten credit terms extended to customers.
In uncertain conditions, long receivable cycles can weaken liquidity and expose firms to default risk. Companies that sell on credit may find themselves financing customers while their own suppliers demand faster payment.
That imbalance can become costly when input prices are rising.
Tighter expenditure control was another key recommendation.
Mr Jackson said businesses must review costs line by line and preserve cash, particularly in areas where spending does not directly support revenue generation or operational resilience.
The advice reflects a broader shift in Ghana’s macroeconomic environment.
During periods of high inflation, businesses often focus on price adjustment, stock holding, exchange-rate protection and survival. In a low-inflation but cost-pressured environment, the focus must shift to margins, cash flow, productivity and balance-sheet protection.
This is a more subtle challenge.
When inflation is high, the threat is obvious. Everyone feels it. Consumers complain, businesses reprice, and policymakers react.
But when consumer inflation is low while producer costs rise, the danger can be hidden inside corporate accounts.
Businesses may still record sales growth but suffer declining margins. They may still appear active but face cash-flow pressure. They may still keep customers but lose profitability on each transaction.
That is why Mr Jackson’s warning should be taken seriously.
The current environment demands that firms ask hard questions.
Are input costs rising faster than selling prices?
Are customers paying on time?
Is foreign-currency borrowing properly matched with foreign-currency revenue?
Are inventory levels too high?
Are operating expenses aligned with expected cash flow?
Are suppliers likely to increase prices in the next quarter?
Can the business survive a fuel-price shock?
These questions are now central to business resilience.
For policymakers, the divergence between consumer and producer inflation also deserves attention. If producer costs continue rising, the pressure could eventually appear in consumer inflation or weaken business performance.
Higher consumer inflation would threaten the country’s recent price-stability gains. Weaker business margins could affect jobs, investment, credit quality and tax revenue.
For firms, the message is clear: low consumer inflation is welcome, but it is not a guarantee of easy business conditions.
Ghana’s economy may have moved away from the intense inflationary pressures of recent years, but businesses are not out of danger. The risk has shifted from headline price escalation to profitability erosion.
In such an environment, strategy must also change.
Companies that continue operating with assumptions from the high-inflation period may misread the market. Those that focus on cost discipline, cash protection, credit control and currency-risk management will be better placed to survive any renewed pressure.
