Inflation Projected to Drop Sharply to 16% in June on Strong Cedi and Lower Energy Prices
Inflation is projected to decline sharply to 16.0% in June 2025, down from 18.4% recorded in May, according to the latest forecast by IC Research.
The anticipated 240 basis points drop in year-on-year inflation is attributed to favourable foreign exchange dynamics, lower petroleum prices, and a marked reduction in transport fares.
“The June 2025 CPI data window recorded a 29.5% month-on-month and 35.3% year-on-year appreciation of the Ghanaian cedi against the US dollar,” IC Research stated. “This exerted downward pressure on prices of imported items, with notable declines in petroleum prices and transport fares. The announced 15.0% reduction in commercial transport fares will continue to restrain transport inflation with downside spillovers for other items.”
The month-on-month inflation rate is expected to slow to 0.8%, supported by easing food price pressures, particularly in the vegetables and tubers category. “We estimate that the lower transport cost likely eased the month-on-month pressure observed for vegetables and tubers last month, potentially sustaining food disinflation in June,” the report noted.
The June forecast marks the fifth consecutive month of disinflation, with cumulative reduction in headline inflation reaching 540 basis points year-to-date. This contrasts sharply with the marginal 10 basis points decline recorded in the same period of 2024.
Food and Non-Food Trends
Food inflation continued its downward trajectory in May, falling by 220 basis points to 22.8% year-on-year, largely driven by a favourable base effect in the CPI basket for vegetables and tubers. However, prices for fish and other seafoods registered an uptick. Inflation for vegetables and tubers alone dropped by 10.3 percentage points to 24.0% year-on-year, despite a 2.4% rise in monthly terms due to seasonal planting.
On the non-food side, inflation declined more sharply, falling by 350 basis points to 14.4% year-on-year, sustaining its downtrend for the seventh consecutive month. IC Research highlighted broad-based declines across 10 of the 12 non-food inflation divisions, with Transport inflation plummeting by 11.8 percentage points to 3.1% year-on-year.
“The cedi’s appreciation ignited a reversal in energy prices, with a domino effect across the transport sector and related cost components,” IC Research added.
The rapid disinflation is expected to provide room for further monetary policy easing by the Bank of Ghana, though analysts caution that sustaining the current trend will depend on continued currency stability and favourable global commodity price movements.
