-Deloitte Forecasts Economic Win!
A major economic victory could be on the horizon for Ghana, as global professional services giant Deloitte predicts the nation is on track to achieve a single-digit inflation rate by the close of 2025.
This optimistic forecast, detailed in Deloitte’s West Africa Inflation update, positions Ghana to comfortably beat the Bank of Ghana’s revised year-end target of 12%.
INTEREST RATE CUTS LOOM AS DISINFLATION TAKES HOLD
The sustained trend of disinflation is giving the Bank of Ghana significant room to maneuver, with Deloitte suggesting that interest rate cuts could commence as early as the July Monetary Policy Committee (MPC) meeting. Such a move would be a major boon for the Ghanaian economy.
“An ease in interest rates will encourage more lending to the real sector and support further output and overall economic growth,” Deloitte stated, highlighting the potential for a revitalized economic landscape.
The firm anticipates that a combination of fiscal consolidation and additional policy adjustments will ensure a continued decline in inflation throughout the latter half of the year.
CAUTION AMIDST OPTIMISM: GLOBAL SHOCKS AND LEVIES POSE RISKS
Despite the positive outlook, Deloitte sounded a note of caution, identifying several “upside risks” that could derail progress. Ongoing global shocks remain a concern, alongside recent tariff adjustments that are pushing up production costs and the prices of goods and services. The 2.45% increase in electricity tariffs was specifically cited as an example.
Furthermore, the implementation of the GH¢1.00 fuel levy on petroleum products is another worry, as it is expected to drive up fuel and transport costs, potentially fueling inflationary pressures.
JUNE 2025 SEES SIGNIFICANT INFLATION DROP
Ghana’s economic data for June 2025 showcased a notable improvement, with inflation declining sharply to 13.7% from 18.4% in the preceding month.
This positive shift was primarily attributed to lower domestic fuel prices, reduced transport costs, a fall in food prices, and an appreciation of the Ghanaian Cedi.
In a further encouraging sign, the month-on-month inflation mirrored the headline trend, recording its first monthly deflation of -1.2% since August 2024. Both the food and non-food sub-indices also saw deceleration, reaching 16.3% and 11.4% respectively in June.
INVESTMENT RETURNS SOAR AS TRANSPORT SECTOR DEFLATES
Deloitte emphasized that the continued decline in inflation has significantly widened the positive real rate of return on investment to a robust 14.3%, a substantial increase from 6.2% in June 2024, using the monetary policy rate as a benchmark.
Among the 13 inflation divisions, the Transport sector stood out, recording a negative inflation rate of -8.5%—a dramatic shift from 19% in June 2024. This reflects the impact of declining domestic fuel prices and transport costs.
While most sectors showed improvement, the insurance and financial services segment was the only one among the top five largest contributors to inflation in June to record an increase compared to a year ago.
However, on a monthly basis, “housing, water, electricity, gas and other fuels,” along with “information and communication,” saw increases to 24.9% and 10.4% respectively, up from 21.6% and 9.7% in May. This suggests a potential uptick in utility costs, which bears watching.