Pace of disinflation to quicken in coming months – Report

The pace of disinflation is expected to quicken soon. A tighter monetary stance and tax reliefs will take effect in April 2025.

IC Insights reports that the latest decline in annual inflation is encouraging. They note that the recent 100 basis points hike in the policy rate to 28.0% has not yet impacted prices. Additionally, Ghana’s President signed a Bill on April 2, 2025, to repeal the E-levy Act. This change may ease taxes and slow price increases.

These fiscal and monetary measures boost optimism for faster disinflation ahead. The May 2025 inflation report is expected on June 4, 2025.

IC Insights also sees early signs of favorable weather as planting season begins. The approval of the 2025 fiscal measures supports agriculture but benefits will come during the third quarter harvest.

For April 2025, IC Insights predicts a decline in annual inflation by 70 basis points to 21.7%. A stable Ghanaian Cedi and tighter policies should reduce demand pressure. However, supply-side constraints with food items may push month-on-month inflation up to 1.2%.

In March 2025, Ghana’s annual headline inflation surprised analysts by declining again. This marked a third consecutive month of decline with signs of strengthening disinflation each month.

Headline inflation fell by 70 basis points to 22.4% year-on-year in March 2025. This is the lowest annual inflation rate in four months and eases concerns about rising domestic yields post-Monetary Policy Committee meeting.