In brief
- Disinflation deepens on the interplay of cost-drags and cost-push factors with the former exerting greater influence. Ghana’s inflation surprised to the downside in January 2026, falling 160bps to 3.8% y/y — the lowest level since July 2002 — on broad-based softness in price pressures across food and non-food inflation which both converged at 3.9% y/y. We attribute the disinflation to year-on-year FX gain, lower fuel prices, VAT cuts and favourable base effects which outweighed utility tariff hikes and reinforced our outlook on durable single-digit inflation in 2026.
- Our conviction gets stronger that inflation remains in single digits in 2026 with scope for the authorities to start cautious normalisation of real rates. Prior concerns over likely second-round effects from 2026 utility tariff hikes had tempered our disinflation outlook, albeit with single digits perceived for most of the year. However, the muted January impact improves visibility, strengthening our conviction about single-digit inflation through end-2026. In our view, upside risk from higher oil prices appears limited unless crude oil price exceeds USD 80pb alongside Cedi weakness. The lower VAT rate will further anchor inflation in single digits, opening room for cautious real rate normalisation.
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