Dr. Isaiah Sikayena

16/12/2025

Ghana’s Inflation at 6.3%: Good News, but Not Time to Relax Yet
As an economist, the news that Ghana’s year-on-year inflation declined to 6.3% in November 2025 is undoubtedly encouraging. It represents a dramatic improvement from 23.0% in November 2024, bringing inflation back into single digits within just one year. This reflects the combined effects of tight monetary policy, fiscal consolidation, and some stabilization in macroeconomic conditions. However, beneath this positive headline lies a more nuanced story that deserves careful attention.
First, while year-on-year inflation has fallen sharply, the monthly inflation rate of 0.9% shows that prices are still rising. This matters because sustained monthly increases at this pace could slow or even reverse the disinflation process over time. Monthly inflation close to 1% often signals lingering demand pressures, fuel price effects, or seasonal food supply challenges. For policymakers, this means that inflation has moderated, but it has not been fully defeated, and any premature relaxation of policy could be costly.
Food inflation remains another key concern. At 6.6%, it is still higher than non-food inflation, which stands at 6.1%. This confirms that food prices continue to be the dominant source of cost pressure for households. Since food accounts for a large share of consumption, especially among low-income and informal-sector households, even modest food price increases can significantly affect welfare. Falling headline inflation therefore does not automatically translate into improved living standards for everyone, particularly the poor.
A striking feature of the November 2025 data is the wide regional disparity in inflation. Inflation ranged from –0.02% in the Savannah Region to as high as 12.2% in the North East Region, with eight regions recording inflation above the national average. Such large differences suggest deep structural issues, including weak market integration, high transport and logistics costs, localized supply shocks, and security challenges in some areas. This implies that a one-size-fits-all national policy may have uneven and sometimes limited effectiveness across regions.
There is also a broader macroeconomic trade-off to consider. The rapid disinflation achieved over the past months has likely been supported by tight fiscal consolidation and restrictive monetary policy. While this has helped stabilize prices, prolonged tight conditions risk constraining credit, private investment, and job creation, particularly for small and medium-sized enterprises. Without timely policy rebalancing, Ghana could drift into a low inflation–low growth situation, which would undermine long-term development.
Going forward, policy must strike a careful balance. On the monetary side, the Bank of Ghana should proceed with gradual and data-driven easing, rather than aggressive rate cuts, until monthly inflation shows clearer and more sustained moderation. Attention should shift toward core and services inflation, not just the headline figure. On the fiscal side, as inflation eases, policy should move away from blunt austerity toward growth-friendly consolidation, protecting productive spending in agriculture, energy, and transport while improving efficiency rather than simply cutting expenditures.
Tackling food inflation requires structural, supply-side solutions, not price controls. Investments in irrigation, storage, warehousing, and market access roads can reduce post-harvest losses and stabilize food prices over time. Similarly, the large regional inflation gaps call for targeted, region-sensitive interventions, particularly in northern Ghana, including improved logistics, strategic buffer stock releases, and security-enhanced market access.
Finally, sustaining low inflation will depend critically on exchange rate stability. Strengthening foreign exchange buffers through export diversification, remittance facilitation, and credible implementation of debt restructuring is essential to lock in current gains and protect real incomes.
In conclusion, the November 2025 CPI Bulletin reflects a remarkable macroeconomic stabilization effort, with inflation falling from crisis levels to single digits in just one year. Yet, persistent monthly inflation, sticky food prices and sharp regional disparities remind us that this progress remains fragile. The policy challenge now is to move beyond crisis control toward inclusive and sustainable price stability that supports growth, jobs, and improved welfare for all Ghanaians

23/05/2025

The Ghanaian cedi has been on a remarkable recovery, emerging as one of the world's best-performing currencies. This turnaround can be attributed to several key factors.

*Reasons for Cedi Appreciation:*

- *Domestic Policy Reforms*: The Bank of Ghana's initiatives, such as Gold4Oil and GoldBod, have significantly increased gold reserves, strengthening Ghana's foreign exchange buffer and boosting investor confidence. Specifically, gold reserves rose by 40.6% from May 2024 to April 2025.
- *IMF Program*: Fiscal reforms under Ghana's IMF program have contributed to the currency's recovery, including the elimination of distortionary taxes like the E-levy and prudent expenditure cuts.
- *Foreign Exchange Inflows*: Record prices for Ghana's key exports, such as gold and cocoa, have boosted foreign exchange inflows.
- *Suspension of External Debt Repayments*: The temporary suspension of external debt repayments has alleviated pressure on foreign exchange reserves, enabling the cedi to stabilize.
- *Bank of Ghana Interventions*: Direct market interventions, including a $490 million forex injection in April 2025, have supported the currency's appreciation.
- *Global Economic Conditions*: The US dollar's weakening due to trade tensions and recession concerns has indirectly benefited emerging market currencies like the cedi.

*Why Price Reductions Haven't Followed:*

- *Price Stickiness*: Businesses are uncertain about the sustainability of the cedi's strength and hesitate to reduce prices.
- *Domestic Cost Pressures*: Expenses like electricity, and labor remain elevated, limiting businesses' ability to lower consumer prices.
- *Inventory Cycles*: Many traders continue selling goods purchased when the cedi was weaker, meaning the benefits of currency appreciation will only manifest as new stock arrives.
- *Global Commodity Prices*: Elevated global commodity prices for essentials like rice, wheat, and fuel keep local prices high despite currency gains.
- *Market Dynamics*: Downward price adjustments face weaker competitive and regulatory pressures, allowing some businesses to maintain higher margins.

Despite these challenges, some experts believe that prices will eventually decrease as the cedi's appreciation translates to lower costs for imported goods. The Trade Minister has assured consumers to expect price reductions within 60 days. However, others caution that the relationship between currency fluctuations and prices is complex, and the impact may take time to materialize.

12/03/2025

What are your thoughts on Ghana's 2025 budget?

12/03/2025

"we will abolish the 10% withholding tax on winnings from lottery, otherwise known as the (Betting Tax)"

Question:
Is the 10% withholding tax on lottery winnings different from the betting tax? If so, which of these is the Finance Minister seeking to abolish? Clarification is needed to determine whether the focus is on removing the 10% withholding tax on lottery winnings or the 10% betting tax.

16/02/2025

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19/01/2025

It is high time Ghana takes lessons from the tragic experiences of Rwanda and other war-torn countries. Sensational journalism, often characterized by unverified and inflammatory reporting, has proven to be a dangerous catalyst for unrest and division. The recent Obuasi incident is a stark reminder of the potential harm such practices can cause when allowed to fester unchecked.
Journalists wield immense influence, and with that influence comes the responsibility to inform, educate, and unite rather than divide. When journalistic standards are compromised, as seen in some uncivilized reporting, the consequences can spiral out of control, leading to chaos and instability. Ghana must act decisively to prevent such occurrences by enforcing ethical standards in media practices and holding offenders accountable.
Let this be a wake-up call to prioritize truth, responsibility, and professionalism in journalism. It is only by fostering a culture of ethical reporting that we can safeguard national unity and prevent the repetition of avoidable tragedies. The time to act is now before sensationalism tears at the fabric of our nation.

06/01/2025

Happy New Year

22/12/2024

According to the Guardian, Shell spent over $10 million in 2020 to block climate action. And it’s not just Shell. Oil giants like ExxonMobil and BP, have also funneled significant funds into lobbying efforts (though their exact contributions remain undisclosed).

This is perhaps one example of how powerful fossil fuel lobbies can shape policies and stall renewable energy transitions. Another stark illustration is the denialist conservative movement in the United States, where opposition to climate mitigation policies is often fueled by fears of stifled growth and diminished profitability.

But what about the subtler, less visible forces at play in emerging economies, particularly in Africa? Is there a lesser recognized, silent opposition to climate change mitigation and the broader agenda of transitioning to cleaner energy systems?

We draw on the “theory of lobby” to understand the dynamics of energy transitions, especially in light of how the fossil fuel industry influences renewable energy deployment, including the possibilities of transitioning to cleaner energy systems.

Using Ghana as a surrogate of emerging oil-producing economies, the results show a consistent negative relationship between fossil fuel production and renewable energy deployment. Interestingly, while fossil fuel production initially increases the probability of transitioning to renewable energy (from 39.65% to 58.42%), this potential is reversed by foreign direct investment, which reduces the likelihood to approximately 42%.

This study investigates the impact of fossil fuel industry on renewable energy deployment in emerging oil-producing economies, using Ghana as the subject of analysis. Drawing on the “theory of lobby,” the study extends previous analyses to examine how fossil fuel production influences the possib...

17/12/2024

It would be surprising if the NDC government decides to review the Free SHS policy to cover only day students while simultaneously implementing a free first-year university policy. Such a move could be seen as a "robbing Peter to pay Paul" approach, reallocating resources in a way that might undermine the broader accessibility of secondary education, which is a critical foundation for higher learning. While making university education more affordable is commendable, doing so at the expense of a universally accessible Free SHS program could widen educational inequalities, particularly for boarding students from underprivileged backgrounds. A balanced approach is needed to ensure both policies complement rather than compromise each other, maintaining equity and sustainability in educational opportunities.

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