Ghana’s inflation rate witnessed a significant drop to 40.1% in August, marking the lowest figure in the past 12 months. This inflation drop comes after four consecutive months of rising inflation, offering a glimmer of hope amid economic challenges.
The country’s inflation trajectory has been far from steady, with fluctuations that saw an uptick in July 2023 following a preceding decline. While experts initially anticipated a sustained drop in prices after a peak in December 2022, this year’s supply constraints and high production costs disrupted that projection.
Food and non-alcoholic beverages were the primary drivers of the 40.1% year-on-year inflation rate, accounting for 42.7% of the division. Transport and utilities, including housing and other fuels, followed closely behind, contributing 10.5% and 10.2%, respectively.
Though headline inflation has decreased significantly, food inflation remains stubbornly high at over 51%. This persistent food inflation, despite financial assistance from the International Monetary Fund (IMF), highlights fundamental challenges within Ghana’s agriculture sector.
Structural issues such as limited access to credit, inadequate infrastructure, outdated farming practices, and inconsistent government policies continue to hinder the sector’s productivity. The government’s Planting for Food and Jobs program, initiated in 2017 and supported with an annual average of $70 million, has yet to yield a significant reduction in food inflation which some people have called an abismal failure.
While Ghana grapples with economic challenges, including public debt nearly equal to its GDP, efforts are ongoing to stabilize the situation. The World Bank has recommended structural reforms, including increased domestic revenue collection, tighter expenditure controls, and addressing energy sector deficiencies, as part of the recovery plan for Ghana’s economy.
