An economist at the University of Ghana Business School has described Ghana’s inflation decline to 5.4 percent in December 2025 as evidence that the country’s economy has moved out of intensive care, highlighting the dramatic turnaround from crisis levels recorded just three years ago.
Dr. Jabir Ibrahim Mohammed, a senior lecturer in the Department of Finance, characterized the achievement as a signal that Ghana’s economic recovery has reached a significant milestone. The inflation rate represents the lowest level since the Consumer Price Index (CPI) was rebased in 2021 and marks the 12th consecutive month of decline.
The December 2025 figure represents an 18.4 percentage point reduction from the 23.8 percent recorded in December 2024 and a remarkable drop from the 54.1 percent peak reached in December 2022 during the height of Ghana’s debt crisis. Dr. Mohammed noted that such high inflation devastated household budgets, with food prices and essential goods climbing overnight while transport fares and rents surged without warning.
The economist emphasized that low income earners were particularly vulnerable during the crisis period, with inflation acting as what many economists termed a silent thief that eroded purchasing power and destroyed savings almost instantly. The economy was essentially in survival mode during 2022 and much of 2023, requiring emergency intervention through the International Monetary Fund (IMF) Extended Credit Facility programme.
Dr. Mohammed attributed the inflation decline to deliberate policy measures designed to strengthen economic fundamentals. The government implemented reforms focused on stronger public finances, improved revenue collection, tighter spending controls, and clearer monetary policy frameworks, all working in concert to build resilience against external shocks.
Using a medical analogy, the economist suggested that these economic policies functioned like immune boosters for the economy. Just as medicine strengthens the body to fight future illness, sound economic policies help the economy resist shocks and maintain stability, he explained. The implication is that Ghana now possesses improved capacity to withstand potential disruptions without returning to crisis conditions.
Government Statistician Dr. Alhassan Iddrisu announced the December inflation figure on Wednesday, January 7, noting that the rate had declined from 6.3 percent in November. The disinflation process has been broad based, with notable reductions in both food and non food categories rather than being driven by improvements in a single component.
Food inflation eased to 4.9 percent in December from 6.6 percent in November, a significant moderation given that food accounts for approximately 43 percent of household expenditure in Ghana. Non food inflation also declined to 5.8 percent from 6.1 percent during the same period, demonstrating that price pressures are easing sustainably across the economy.
The decline was further supported by moderating inflation for both locally produced and imported items. Inflation for locally produced goods fell to 5.9 percent in December from 6.8 percent in November, while inflation for imported items decreased to 4.3 percent from 5.0 percent, reflecting both improved domestic production conditions and a stronger exchange rate.
Ghana’s cedi appreciated approximately 40.7 percent against the U.S. dollar during 2025, the first annual appreciation in decades and a remarkable turnaround from years of persistent depreciation. Higher cocoa and gold prices contributed significantly to the currency’s strength, alongside improved fiscal management and rising international reserves that reached $13.83 billion by year end.
The inflation performance brought Ghana well within the Bank of Ghana’s (BoG) target range of six to eight percent, with a tolerance band of two percentage points on either side. The central bank has responded to the improving conditions by reducing the monetary policy rate from 27 percent in early 2025 to 18 percent currently, supporting credit growth while maintaining vigilance against inflation risks.
Finance Minister Dr. Cassiel Ato Forson emphasized that the inflation decline reflects growing confidence in Ghana’s economic management and demonstrates restored credibility in policy frameworks. The achievement comes alongside other positive developments including GDP growth of 5.5 percent in the third quarter of 2025, driven by improvements in agriculture and services sectors.
However, Dr. Mohammed cautioned that leaving intensive care does not equate to full recovery. The economist stressed that Ghana must protect these gains by maintaining policy discipline, supporting productive sectors, and ensuring that growth benefits reach ordinary citizens. A return to reckless spending or weak fiscal controls could potentially undo the progress achieved over the past three years.
The IMF completed the fifth review of Ghana’s loan programme in December, allowing for an immediate disbursement of approximately $385 million and reinforcing confidence in the country’s reform trajectory. The Washington based institution noted that Ghana has successfully brought inflation within its target range and rebuilt international reserve buffers while cautiously easing monetary policy.
Treasury bill rates declined from over 30 percent at the end of 2024 to approximately 11 percent during 2025, reducing government borrowing costs substantially. The trade balance posted a surplus of $8.5 billion by the end of October 2025, up from $2.8 billion during the same period in 2024, reflecting improved export performance and more stable import demand.
Economic analysts note that while the inflation trajectory is encouraging, Ghana remains exposed to global commodity price swings and external shocks given its status as a small, open economy heavily dependent on cocoa, gold, and crude oil exports. Maintaining the current path requires continued coordination between fiscal and monetary authorities and sustained commitment to structural reforms.
The dramatic improvement from crisis to stability demonstrates what deliberate policy intervention can achieve when properly implemented and sustained. Dr. Mohammed’s assessment suggests optimism about Ghana’s economic outlook while acknowledging that vigilance and continued discipline remain essential to consolidate gains and ensure the recovery translates into improved living standards for ordinary Ghanaians.
The government faces ongoing challenges including high public debt levels despite restructuring efforts, infrastructure deficits that constrain productive capacity, and pressure to increase spending on social services and development projects while maintaining fiscal discipline. Balancing these competing demands will test policymakers’ resolve as Ghana moves beyond stabilization toward sustainable growth.
