Price pressures shift from food to services …as inflation rises to 5%

Ghana’s inflation pressures are increasingly shifting away from food and imported goods toward domestically-driven services, housing and utility costs, even as the overall price level remains substantially below where it stood a year ago.

Consumer inflation accelerated to 5 percent in August 2026 from 4.6 percent in July, according to the latest data from Ghana Statistical Service, ending a one-month decline but remaining 6.5 percentage points below the 11.5 percent recorded in August 2025.

The increase reflects a changing composition of inflation rather than a broad-based resurgence in price pressures. Food inflation eased to 3 percent from 3.1 percent in July, while non-food inflation climbed to 6.8 percent from 6.1 percent.

Services remained the fastest-rising component of the consumer basket, recording inflation of 8.6 percent compared with 3.8 percent for goods.

The widening gap suggests that the next phase of Ghana’s disinflation process may depend less on improving food supply and exchange-rate stability and more on containing domestic cost pressures in areas such as housing, transport, education and other services.

Government Statistician Dr. Alhassan Iddrisu said the data point to a fundamental shift in the sources of inflation.

“Food now makes up 29.1 percent of all inflation felt in August. Non-food makes up the rest of the 70.9 percent,” he said, adding that inflation was “no longer mainly a food story” but increasingly driven by non-food items and services.

On a monthly basis, however, consumer prices declined by 1 percent in August, reversing the 0.1 percent increase recorded in July and representing the sharpest monthly fall in prices this year.

The monthly decline was largely supported by food prices, which fell by 2.5 percent during August. Several staples recorded substantial annual price declines, including limes, maize, cocoyam leaves, sweet potatoes and fried fish.

Food inflation has now fallen sharply from 14.8 percent in August 2025, providing relief to household budgets and helping anchor the broader disinflation trend.

The pressure has instead become more concentrated in domestic services and administered or structural costs. Housing, water and energy contributed the largest share of overall inflation, accounting for 29.5 percent of the August headline figure. Inflation within the category rose to 11.6 percent from 8.3 percent in July.

Food and beverages contributed 29.1 percent, transport accounted for 13.2 percent, education services contributed 7.5 percent and restaurants and hotels added 4.8 percent. Together, the five divisions accounted for about 84 percent of inflation recorded during the month.

The figures also point to the predominantly domestic nature of current price pressures. Inflation for locally-produced items rose to 6.1 percent from 5.9 percent, compared with 2.2 percent for imported goods.

According to Dr. Iddrisu, locally produced items accounted for about 86 percent of the inflation experienced in August, suggesting that domestic transport, energy, wage and rent costs now matter more to the inflation outlook than international commodity prices.

The relatively low rate for imported inflation also reflects the role of exchange-rate stability in containing the cost of foreign goods.

“Domestic costs, such as transport, energy, wages and rents, matter far more than what happens on the world markets,” Dr. Iddrisu said. “Services remain the last hurdle and the main risk to further disinflation.”

Regional disparities further demonstrate that the national inflation figure masks significantly different household experiences. The Central Region recorded the highest inflation rate at 11.1 percent, up sharply from 7.5 percent in July. Bono East recorded deflation of 3.3 percent, meaning average prices in the region were lower than a year earlier.

Ashanti recorded inflation of 8.7 percent and Greater Accra posted 5 percent. Given their combined weight of about 63.6 percent in the national consumer basket, price developments in the two regions have a substantial influence on the headline figure.

At the individual product level, price movements remained volatile. Fresh tomatoes recorded annual inflation of 158.3 percent, followed by ginger at 128.3 percent. Rent, charcoal, cooked rice and transport-related costs were also among the largest contributors to overall inflation.

The August outcome comes as the Bank of Ghana maintains a cautious outlook despite inflation remaining below the lower boundary of its medium-term target band of 8 percent plus or minus 2 percentage points.

At its 131st Monetary Policy Committee meeting, the central bank kept its policy rate unchanged at 14 percent, arguing that inflation is expected to rise gradually into the target range over the medium term.

Potential increases in utility tariffs, renewed geopolitical tensions in the Middle East and disruptions to global energy markets remain key upside risks. Heavy rains could also affect food supply chains and reverse some of the recent gains in food prices.

The Bank of Ghana expects continued fiscal consolidation, monetary restraint, liquidity sterilisation and stronger reserve buffers to mitigate these risks.

 While the broader disinflation process remains intact, services inflation has proven more persistent and could limit the pace of future monetary easing.

“The current policy stance remained appropriate to guide inflation into the medium-term target band, while allowing time to assess the evolving geopolitical developments and their potential impact on the domestic economy,” the Monetary Policy Committee said.

Source: Business & Financial Times