Ghana rides high with a world-beating currency

News24

07-05-2025

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Ghana's inflation rate fell to an eight-month low in April as the West African nation's world-beating currency helped rein in import costs.
Consumer prices rose 21.2% in April, compared with 22.4% the month before, Government Statistician Alhassan Iddrisu told reporters in the capital, Accra, on Wednesday. Prices rose 0.8% in the month.
Non-food price growth decelerated to 17.9% from 18.7%, as a rally in the cedi reduced the cost of imports. The currency has strengthened almost 16% against the dollar since the start of April, making it the world's best-performing currency, according to data compiled by Bloomberg.
Food inflation cooled to 25% from 26.5%.
The data is unlikely to persuade the central bank to lower interest rates later this month, as it awaits further evidence of a slowdown in price-growth after its surprise 100 basis-point increase in March to 28%, said Agyapomaa Gyeke-Dako, a senior lecturer and economist at the University of Ghana Business School.
It tightened at its last meeting to 'mop up any excess liquidity, so now the central bank action going forward may not readily reduce the monetary policy rate yet because there might still be some threats to inflation coming from the hikes in utility prices,' she said before the data release.
The Bank of Ghana may also be reluctant to ease policy as 'easier monetary conditions could rekindle inflationary pressures,' said Mark Bohlund, a senior credit analyst at REDD Intelligence.
Cuts may be on the horizon later in the year if the disinflation process continues. Governor Johnson Asiama said at the March meeting that as the monetary authority sees 'the next readings of inflation and we see declines, the committee will reassess the scope for a gradual easing in the policy stance.'
Price growth in the world's second-largest cocoa grower has been above 10% — the upper limit of the central bank's target band — since September 2021 as a debt crisis led to a plunge in the cedi, making imports more costly. The MPC expects inflation to slow to about 16% by the end of this year and return to the 6%-10% band by the second quarter of 2026.
The International Monetary Fund also expects inflation to slow further because of the government's pledge to curb rising living costs and support the cedi with fiscal adjustments.
'It makes us very confident that inflation is going to go down in the next few months toward the program objectives,' Stéphane Roudet, IMF's mission chief to Ghana, said in Washington in April.