- Ghana’s 5.2 Per Cent Inflation Remains Favourable — Director of Research BoG
Ghana’s inflation rate remains in “very good territory” despite accelerating for a second consecutive month, according to the Bank of Ghana’s Director of Research, Dr Philip Abradu-Otoo, who has urged that the country’s performance be assessed within its monetary-policy framework rather than through simple regional comparisons.
Consumer inflation rose to 5.2 per cent in September 2026 from 5 per cent in August, extending the upward movement that followed an earlier period of sustained disinflation. The increase has raised questions about whether price pressures have reached a turning point or merely reflect temporary volatility around a comparatively low level.
Dr Abradu-Otoo argued that Ghana’s inflation record remains favourable because the country operates an inflation-targeting regime in which interest rates are the principal instrument for controlling prices.
“So we have an inflation-targeting framework of monetary policy, and we use the interest rate tool as the main tool to control inflation,” he said at the launch of the Institute of Statistical, Social and Economic Research’s State of the Ghanaian Economy Report 2025.
He cautioned against direct comparisons with some West African economies whose currencies are pegged to the euro. Such arrangements import part of the credibility and stability of the anchor currency, creating different conditions from those facing Ghana’s independently floating cedi.
“Their currencies have been pegged to the euro. The euro is a stable currency, and therefore it feeds into their inflation numbers as very low inflation,” he said.
“By and large, our inflation numbers are in very good territory, and we should be happy about that.”
His assessment is defensible when Ghana’s current position is placed against its recent history. Inflation at 5.2 per cent is low enough to reduce the speed at which household purchasing power is eroded, improve business planning and narrow the inflation premium demanded by lenders and investors.
It is also within the Bank of Ghana’s medium-term target band of 8 per cent, plus or minus two percentage points. Indeed, the September reading sits below the lower boundary of that range, providing the central bank with evidence that its previous tightening and stabilisation measures have delivered results.
Yet “good territory” should not be confused with an absence of risk. The direction of inflation matters alongside its level. Consumer inflation increased for a second month in September, rising from 5 per cent in August, while producer-price inflation accelerated to 4.8 per cent from 4.4 per cent.
Producer prices can signal future pressure because they capture costs at the factory gate before transport, wholesale and retail margins are added. Mining and manufacturing accounted for four of the 4.8 percentage points of producer inflation in September, while electricity and gas recorded inflation of 9.8 per cent.
These pressures do not guarantee a sharp increase in consumer prices. Businesses may absorb higher costs, currency stability can contain imported inflation and weak demand may limit pricing power. But persistent increases in energy, transport and manufacturing costs could eventually reach households or reduce corporate profitability.
The cedi presents another source of uncertainty. Dr Abradu-Otoo said the currency had depreciated by 10.8 per cent since the beginning of the year and explained that a slight increase in public debt reflected exchange-rate movements rather than fresh borrowing.
Currency weakness affects inflation by raising the cedi cost of imported fuel, machinery, pharmaceuticals, food and industrial inputs. The pass-through may occur gradually, but a sustained depreciation can make low inflation harder to preserve, particularly in an economy that remains dependent on imports.
The central bank must therefore assess whether recent cedi weakness is temporary, seasonal or evidence of renewed imbalance. A rate decision based only on the current inflation figure could underestimate pressures developing through foreign exchange, fuel costs and producer prices.
Dr Abradu-Otoo also addressed the decline in Ghana’s international reserves, attributing it to disruptions in gold exports caused by the Middle East crisis. He said the interruption constrained reserve accumulation during the first seven months of 2026 and required the Bank of Ghana to draw on its holdings to support trade and economic activity.
Gold exports resumed in September, and the central bank expects reserve inflows to improve before the end of the year. That recovery will be important because stronger reserves increase the Bank’s capacity to smooth excessive currency volatility and reassure investors about Ghana’s ability to meet external obligations.
The inflation outlook will be central to the Monetary Policy Committee’s next decision. The policy rate has remained at 14 per cent, leaving a sizeable positive gap over current inflation. That provides room for easing, particularly if growth-support considerations strengthen and price pressures remain contained.
However, cutting rates too quickly could increase demand for foreign exchange, weaken the cedi and reverse part of the inflation progress. Holding policy unnecessarily tight for too long could restrain credit, investment and job creation when the economy is attempting to move from stabilisation towards expansion.
The correct interpretation of Dr Abradu-Otoo’s remarks is therefore not that inflation risk has disappeared. It is that Ghana has moved from managing a price crisis to managing the credibility of a low-inflation environment.
That transition changes the policy challenge. When inflation is extremely high, the priority is unmistakably to suppress it. At 5.2 per cent, policymakers must preserve stability while avoiding measures that needlessly constrain productive activity.
The next few readings will matter more than the September number alone. Continued increases in consumer and producer inflation, combined with currency depreciation and energy costs, would weaken the case for monetary easing. Renewed moderation and stronger reserve accumulation would support the Bank’s confidence.
Ghana is entitled to recognise the scale of its disinflation achievement. Businesses and households benefit when prices rise slowly and expectations become more predictable. But durable stability is protected by vigilance, not celebration alone.
Five-point-two per cent may be good territory. The real test is whether Ghana possesses the fiscal discipline, reserve strength and monetary patience required to remain there.
