Ghana’s Strengthening Currency Eases Inflation Pressures

May 8, 2025

(3 Minutes Read)

Ghana witnessed notable economic relief in the last fiscal month, largely attributed to the continued appreciation of the Ghanaian cedi. The currency’s strength helped reduce the cost of imports, a key factor in the country’s improving inflation profile.

According to the Ghana Statistical Service, Ghana’s Consumer Price Index (CPI) declined to 21.2% in April, down from 22.4% in March. This marks the fourth consecutive month of inflation decline. Government Statistician Alhassan Iddrisu, speaking in Accra, confirmed the trend, noting that non-food inflation also slowed, dropping to 17.9% in April from 18.7% in March, thanks in large part to falling import costs.

The recent drop in inflation continues a pattern observed since President John Mahama assumed office. Earlier in the year, inflation fell to 22.4% in March, from 23.1% in February, demonstrating consistent downward movement in prices.

Interestingly, the latest inflation decline came despite a recent tightening of monetary policy. In March, the Bank of Ghana (BoG) raised its benchmark interest rate by 100 basis points, bringing it to 28% in an unexpected move intended to contain inflationary pressures and absorb excess liquidity.

However, for April, analysts believe the primary driver of the inflation reduction was the strong performance of the cedi. Among African currencies, the Ghanaian cedi showed one of the most notable improvements. It appreciated slightly against the US dollar, moving from 15.49 per dollar in March to 15.46 in April. According to Bloomberg data, this made the cedi the best-performing currency globally in April, with an estimated 16% gain against the dollar since the beginning of the month.

The currency’s rise coincided with gains by other regional currencies such as the Tunisian Dinar, Moroccan Dirham, and Seychellois Rupee.

Despite these positive signals, Dr. Agyapomaa Gyeke-Dako, an economist at the University of Ghana Business School, cautioned against expecting an immediate interest rate cut. She noted that the central bank would likely wait for more consistent data confirming a durable slowdown in inflation. She also pointed out ongoing risks, including possible hikes in utility prices, that could keep inflation elevated.

Since September 2021, Ghana’s inflation has remained above 10%, surpassing the BoG’s target range of 6% to 10%. The rise was largely fueled by a debt crisis that devalued the cedi and inflated import prices. Looking ahead, the Monetary Policy Committee (MPC) projects that inflation will moderate to around 16% by the end of 2025, with a return to the official target range expected by the second quarter of 2026.