Fitch Cuts Inflation Forecast Amid Cedi Strength and Slowing Price Pressures
Fitch Solutions has sharply revised its inflation outlook for Ghana, citing a stronger cedi, easing global energy prices and firmer fiscal discipline under the administration of President John Mahama.
In a research note released this week, the ratings and macroeconomic intelligence unit said it now expects average inflation to reach 15.4% in 2025 and 12.2% in 2026, down from its earlier projections of 17.1% and 13.9% respectively. The revision follows a steeper-than-anticipated drop in headline inflation in June, which eased to 13.7% year-on-year, from 18.4% in May — the lowest level since December 2021.
According to Fitch, the moderation in inflation was driven by sharp currency appreciation and weaker global commodity prices, particularly in energy markets. The Ghanaian cedi appreciated by 50% against the US dollar in April and May, easing import costs and helping anchor inflation expectations.
“The transport component of Ghana’s inflation basket recorded deflation for the first time since 2009, making it the principal driver behind June’s inflation decline,” the report noted.
The disinflationary trend has also been supported by declining food inflation, attributed to favourable base effects and reduced import prices. The report highlighted that the cedi has held steady since May, supported by strong external buffers — with international reserves rising to $7.9 billion in April, equivalent to around four months of import cover.
Fitch attributed the reserve build-up to elevated export receipts, bolstered by record-high gold prices amid central bank accumulation and heightened geopolitical uncertainty. “Combined with the authorities’ stated preference for a stronger exchange rate, we expect the Bank of Ghana will maintain relative currency stability through the remainder of the year,” it added.
The macroeconomic outlook, Fitch suggested, is also benefiting from tighter fiscal policy, with government expenditure declining to 4.0% of GDP in Q1 2025, compared to 4.9% during the same period in 2024. The fiscal consolidation efforts are expected to reduce domestic demand-side pressures and reinforce disinflation.
Despite a brief spike in oil prices during the June Iran-Israel conflict, energy markets have since calmed following a ceasefire agreement. Crude prices remain well below 2024 levels, weighed down by sluggish global demand — exacerbated by US trade tariffs — and rising oil supply, reducing Ghana’s exposure to imported inflation.
Fitch concluded that the disinflation process is likely to persist through the second half of 2025, barring major external shocks, as macroeconomic fundamentals continue to improve.
