Inflation, Cedi Performance & Business Growth

Over the past few years, Ghana’s economy has been through significant upheaval  from record-high inflation and a sharply weakened currency to a concerted recovery strategy that is now beginning to show encouraging results. For businesses, households, and investors, understanding the current state of inflation, the performance of the Ghanaian cedi, and the broader implications for economic growth is critical. This article examines each of these in depth and explains what they mean for Ghana’s economic future.

Understanding the Inflation Landscape in Ghana

Inflation  the rate at which the general level of prices for goods and services rises has been one of Ghana’s most pressing economic challenges. After reaching crisis levels in recent years, inflation has since followed a remarkable downward trend.

From High Inflation to Stability

In late 2022, Ghana experienced inflation rates above 50%, one of the highest in the world at that time. By mid-2025, through sustained policy efforts and structural reforms, the rate dropped sharply, reaching a single‐digit figure of 9.4% by September 2025  the first time in several years Ghana achieved such a level.

This downward trend continued into 2026. By January 2026, consumer price inflation had fallen further to 3.8%, the lowest rate since 2021, according to the latest data released by the Ghana Statistical Service.

What Drove the Decline?

Several interconnected factors contributed to this sharp moderation:

• Monetary policy tightening: The Bank of Ghana used aggressive interest rate hikes in earlier years to tame runaway inflation expectations.

• Currency strength: A stronger Ghanaian cedi reduced the cost of imported goods a major component of inflation.

• Improved supply conditions: Food inflation  often the biggest driver of headline inflation  fell sharply, reflecting better production and distribution.

• Fiscal discipline: Efforts by the government to manage public expenditure and restore confidence helped anchor price expectations.

The sustained decline in inflation has real implications: for consumers it means slower price increases for essentials, and for businesses it provides greater predictability for planning and investment.

The Ghanaian Cedi: From Crisis to Relative Strength

The performance of Ghana’s currency the Ghanaian cedi has also been central to the economic story. In previous years, the cedi depreciated sharply against major global currencies such as the US dollar, which drove up import costs, contributed to inflation, and squeezed businesses.

A Dramatic Turnaround

In 2025, the cedi’s trajectory dramatically improved. Data from Graphic Online reported that the cedi appreciated by around 37.4% year-to-date by October 2025, making it one of the best-performing currencies in Sub-Saharan Africa during that period.

The Bank of Ghana and policymakers cited several reasons for this turnaround:

• Strong foreign exchange reserves: The cedi’s resilience was supported by a solid reserve buffer, which helped stabilise foreign exchange markets.

• Monetary interventions: Regular foreign exchange auctions and other central bank interventions improved market confidence.

• Export-supported inflows: Revenues from commodities such as gold contributed foreign currency inflows, bolstering the cedi.

This improvement had important effects. A stronger cedi eased import costs, reduced inflationary pressures, and improved Ghana’s ability to meet external obligations.

Current Exchange Rate Context

By early 2026, the cedi was trading significantly stronger compared to its weakest levels in the previous recovery period. In 2026, official reports noted inflation at around 6.3% at the start of the year, with the cedi more stable against the US dollar around GH¢10.51 per USD  marking a period of relative currency peace.

How Inflation and the Cedi Impact Business Growth

Inflation and currency performance are not abstract economic statistics they deeply influence the real world, especially business growth, investor confidence, employment, and consumer spending.

1. Business Planning and Investment

High, unpredictable inflation makes it difficult for companies to plan costs, pricing, and investment. It eroded consumer purchasing power in past years, cutting into market demand for non-essentials. But as inflation eased into single digits, businesses gained much-needed predictability.

A stable inflation environment means firms can forecast future costs and prices with more confidence, a key factor for long-term capital investment and operational planning. Lower inflation also tends to reduce the real cost of borrowing (after factoring in interest rates), which supports expansion.

2. Exchange Rate Stability and Import-Dependent Businesses

For companies that rely on imported inputs  from machinery to raw materials the cedi’s appreciation has a direct benefit: lower input costs and more competitive pricing. Services and manufacturing sectors often depend on imported parts or technology, so currency strength can make these sectors more profitable.

However, exchange rate volatility remains a risk. While the situation has improved, external shocks  such as fluctuations in commodity prices or global tightening  could still exert pressure. Accounting firm PwC has warned that Ghana’s economy remains vulnerable to global commodity swings and tighter global financial conditions  a reminder of ongoing risk exposure.

3. Interest Rates, Borrowing, & Credit Access

Interest rates affect business borrowing costs. With inflation easing, the Bank of Ghana cut its policy rate  for instance to 15.5% in early 2026 which signals easier credit conditions ahead.

Lower interest rates help small and medium enterprises (SMEs) access finance for expansion, allow larger companies to refinance expensive debt, and can stimulate investment across sectors. Stable prices and interest rates also tend to attract foreign investment, particularly in productive sectors such as agribusiness, services, and technology.

Macroeconomic Growth: What Do the Numbers Say?

Growth in the overall economy reflects how inflation and currency trends translate into broad business performance and economic output.

GDP Growth Outlook

Independent analysts and institutions have issued growth projections that signal optimism:

• Deloitte predicted a GDP growth rate of around 5.9% for Ghana in 2026, up from 5.5% the previous year.

• Other global institutions, like the World Bank, revised Ghana’s 2025 growth estimate upwards to 4.3%, reflecting stronger performance than expected.

These figures suggest that the economy is firmly on a recovery path, expanding at rates that could support job creation, consumer demand, and sectoral growth.

Drivers of Growth

Growth is not uniform across all sectors. Some contributors include:

• Services and industry sectors: These often expand swiftly with improvements in economic confidence and domestic demand.

• Agriculture: A traditional backbone of Ghana’s economy, improvements in commodity prices and export markets help sustain rural incomes and business activity.

• Construction and infrastructure: As inflation stabilises and financing becomes more available, infrastructure projects often see renewed activity.

A strong macroeconomic backdrop can support entrepreneurship, attract foreign direct investment (FDI), and stimulate growth across new and existing sectors.

Real-World Effects on Consumers and SMEs

So what do these macroeconomic trends mean for everyday Ghanaians and small businesses?

Lower Cost of Living Pressures

With inflation declining, prices of everyday goods  particularly food and non-food essentials are rising more slowly or stabilising. For households that struggled with steep price increases in previous years, this offers relief and restores purchasing power.

Services like transport and energy also benefit from calmer price environments, which indirectly boost business efficiency.

Business Confidence & Investment Decisions

For SMEs  often the backbone of the economy and major employers stable prices and currency reduce risk. With past uncertainties easing, business owners can invest in new equipment, hire staff, and explore growth opportunities without the steep cost pressure of recent years.

Lenders are more willing to extend credit when inflation expectations are stable, which helps businesses scale operations.

Fuel & Input Costs

Reductions in transportation and fuel prices — which rose steeply during high-inflation periods — provide cost relief. For example, fuel prices have been reported at their lowest levels in years, easing operational challenges for logistics and transport businesses.

Challenges and Risks Ahead

While there are genuinely positive signs, important challenges remain.

Dependency on Commodities

Ghana’s economy is still influenced by commodity prices (such as gold, cocoa, and oil). Price swings on global markets can impact export revenues, foreign exchange inflows, and investor confidence.

For instance, despite improvements, the economy is considered vulnerable to commodity price swings and global tightening, according to PwC.

Fiscal and Structural Reforms

To sustain gains, Ghana must continue prudent fiscal management, reduce structural bottlenecks (like power and infrastructure gaps), and improve ease of doing business. Fiscal discipline helps control budget deficits and supports sustainable borrowing — which, in turn, helps maintain investor confidence.

Inflation and Monetary Policy Balance

Lower inflation is beneficial, but policymakers must guard against sharply cutting interest rates too quickly — which could risk losing control over price stability. The central bank must carefully balance inflation objectives with growth support.

Looking Ahead: What to Expect

Overall, Ghana’s economic trajectory is marked by cautious optimism:

• Inflation appears to be stabilising at historically low levels, with January 2026 figures showing a significant drop in price growth.

• The Ghana cedi’s performance has improved, supporting import costs, investor confidence, and aggregate demand.

• GDP growth projections are positive, suggesting recovery momentum is translating into broader economic gains.

• Business confidence and credit availability are improving, spurred by monetary policy easing and reduced price instability.

For investors, entrepreneurs, and policymakers, this environment presents both opportunity and challenge. The opportunity lies in leveraging stability to foster innovation, scale businesses, and diversify the economy. The challenge lies in navigating external shocks and sustaining policy discipline to preserve gains.

Ghana has made remarkable progress from the economic headwinds of recent years. By bringing inflation down from crisis levels, stabilising the cedi, and creating conditions conducive to business growth, the foundations for a sustained economic recovery are taking shape.

However, this journey requires continued policy vigilance, structural improvements, and efforts to diversify the economy. If Ghana can maintain macroeconomic stability while stimulating private sector growth, the next chapter could see robust, broad-based development that benefits everyday citizens, small business owners, and global investors alike.