Inflation Ends 2025 Well Within Targets

The inflation rate maintained its sustained and protracted downward trajectory to end the year at its lowest since the consumer price index was rebased in 2021. December’s inflation rate was reported at 5.4%, slowing down from 6.3% in the previous month, and a significant drop from 23.8% over the same period last year. This represents the twelfth successive drop in the headline inflation reading, signalling a passively tamed inflation outlook and an economy on an impressive recovery path. The 5.4% inflation print consequently showed that inflation ended the year well anchored within the central bank’s medium-term target band of 8.0% ± 2.0% and well within the government’s end-period inflation target of 11.9%.

The month-on-month inflation reading, however, remained unchanged at 0.9% in December, mainly on the back of an upsurge in demand as consumers increased their purchases before and during the festive season. This was evidenced by the higher contribution of some food processing items to the headline inflation, with charcoal, green plantain, and smoked herrings contributing a minimum of 7.0% to the year-on-year inflation rate. The top three items with the highest inflation rates were also associated with food processing, as ginger, green plantain, and charcoal recorded 76.7%, 69.4%, and 66.8% inflation rates, respectively. This notwithstanding, the persistent decline in the successive inflation readings in 2025 has been sustained by a tight fiscal discipline, the Cedi’s record run, and a slump in fuel and transport prices in most parts of the year, among others.

Food inflation persisted downwards yet again, slowing down to 4.9% in December from 6.6% in November, and a sharp decline from the 2025-year high of 28.3% in January. A significant reduction in the prices of some items, such as cereal products and tea & other plant products, with deflation rates of 2.9% and 1.6% helped to push the food inflation basket downwards. Month-on-month food inflation, conversely, stayed unchanged at 1.1% in December as items in this category recorded mixed movements, with increases in the prices of some items offsetting reductions in the prices of others.

The non-food inflation basket recorded a comparatively slower drop in its year-on-year inflation reading, slowing down from 6.1% in November to print at 5.8% in December. Transport persisted as the only item that recorded a decline in prices for the seventh consecutive time. Month-on-month non-food inflation edged down from 0.8% in November to print at 0.6% in December. Transport and personal care & miscellaneous goods with deflation rates of 0.1% and 0.4% helped to push down the group’s December reading.

Across the regions, the inflation rate ranged from -1.2% in the Savannah region to 11.2% in the Eastern region. Inflation on local and imported items both saw reductions, although that on imported items posted the biggest decline following the Cedi’s renewed strength in December. Inflation on local items lowered from 6.8% in November to 4.0% in December, whilst that on imported items dipped from 5.0% to 1.4% over the same period.

The first sitting of the central bank’s Monetary Policy Committee (MPC) will be due later in January, where the committee’s hands will be limited, as it is widely expected that the MPC will again cut the policy rate. The committee will, however, be expected to act cautiously, as any extreme cut could erase gains already made.