Inflation Rate Slow Down to Begin 2025 at 23.5%

Ahead of the presentation of the substantive budget statement for the year, where the new government will be expected to communicate its macroeconomic targets, the rate of increase in the consumer price index slowed in January, pushing the inflation rate to record its first dip in five months. The inflation rate accordingly printed at 23.5% in January, slowing down from an 8-month high of 23.8% recorded in December 2024. The monthly inflation reading between December and January also saw a decline, slowing down from 1.8% to 1.7% respectively.

Although several items in the inflation basket recorded slower increases, the inflation rate remained higher as protracted adverse weather conditions delayed harvest, forcing the prices of staples to surge. Data released by the statistical office showed that some local food items with significant weights, such as Yam and Tomatoes, sustained high inflation rates at 72.9% and 43.3%, respectively. This, coupled with increases in the prices of petroleum products over the period added to pressures on consumer prices.

Food inflation maintained its dominance in the inflation basket, sustaining its gradual increases over the past six months. The annual food inflation hardened from 27.8% in December to print at 28.3% in January, the highest in twelve months. On a month-on-month basis, however, the food basket recorded a decline from 2.8% at the close of last year to begin this year at 2.0%. The pick up in food inflation was led by Vegetables, tubers & plantains and Fruits & nuts, with annual inflation rates of 46.0% and 43.6% and monthly readings of 3.0% and 5.2% respectively.

The non-food inflation basket saw its third consecutive decrease in January, with its annual reading coming in at 19.2%, the lowest in the past 1 year from 20.3% recorded in December, 2024. Ten out of the observed twelve sub-group items recorded rates lower than the group’s inflation rate. The month-on-month inflation reading, on the other hand, picked up from 0.9% in December to print at 1.4% in January.

Across the regions, the inflation rate hovered between 17.1% in the Volta region and 34.3 % in the Upper West region. Inflation on local and imported items posted diverging trends as inflation on local items saw a dip from 26.4% in December to 25.7% whilst that on imported items rose from 17.9% in December to print at 18.4% in January.

The first Monetary Policy Committee (MPC) meeting of the central bank saw the committee stay glued to its cautious stance as it announced a policy rate stay. The MPC, nevertheless, remained hopeful as its latest inflation forecast showed a steady decline and a return to the path of disinflation, with an extended time horizon of achieving the bank’s medium-term target of 8.0% ± 2.0%.