In brief
- Disinflation Re-emerges: A sharper drop in inflation reinforces monetary policy flexibility. Ghana’s headline inflation fell sharply to 4.6% y/y in July 2026, exceeding our expectations and reversing June’s base-driven spike. The 70bps decline places inflation at 140bps below the 6.0% lower bound of the Bank of Ghana’s target range and lifts the real policy rate higher to 9.4%, easing pressure for a hawkish policy shift. We expect August inflation to reinforce this view despite an unfavourable base-related upside risk. The renewed disinflation should also strengthen the cap on domestic yields, which appear to have peaked in late July. Ex-post real yields have also increased with the 91-day real T-bill rate up to 1.16% (vs 0.43% in June), enhancing the attractiveness and supporting investor positioning although we expect the 364-day bill to remain the dominant tenor.
- August Inflation: Food relief faces unfavourable base effect, fuel spike, and FX headwinds. We expect improved crop harvests to further ease food inflation in August 2026, particularly for vegetables and tubers, although the heavier rainfall may constrain supply and create an unfavourable base effect. Meanwhile, higher fuel prices and the recent cedi depreciation pose upside risks to non-food inflation. We therefore forecast annual headline inflation at 4.9%, up 30bps, despite expected 1.1% m/m deflation in average prices. Historically, we have noticed an average deviation of 50bps between our forecast and outturn. We thus perceive the August annual inflation between 4.4% and 5.4% (midpoint forecast: 4.9%).
Downloads
Download Full Report