Economist predicts PPI drop will ease prices
By: Rebecca Okine
Economic analyst at Zed, Emmanuel Boateng, says the recent drop in Ghana’s Producer Price Index (PPI) is a significant development that could lead to lower market prices over time, although consumers should not expect immediate relief.
His remarks follow the latest report from the Ghana Statistical Service (GSS), which shows a notable slowdown in inflation at the producer level. The PPI for April 2025 indicates that prices received by domestic producers increased by 18.5% over the past year—down sharply from 24.4% in March. This marks a 5.9 percentage point reduction in year-on-year inflation.
“This is the first fall in three months,” Mr. Boateng noted. “It doesn’t mean prices will stop rising altogether, but we’re beginning to see some easing of pressure on producers.”
The PPI measures average changes in the prices producers receive for their goods and services. A drop in the index typically suggests declining production costs, which could eventually be passed on to consumers in the form of lower retail prices.
“For us as consumers, this is very key,” Mr. Boateng said. “If prices are not coming down while PPI is falling, then what’s the real impact? That’s the question people are asking.”
The GSS report breaks down inflation trends by sector. It shows month-on-month producer price changes of 0.2% for construction and 0.9% for services, while industry experienced a decrease. Year-on-year, however, the sectors show more variation: industry without construction posted 20.8%, construction came in at 13.9%, and services registered a relatively low 5.9%.
“While service inflation is up slightly from the previous month, it’s still low in relative terms,” Boateng explained. “The real improvement is in construction and industry, where we are beginning to see a decline. That could help stabilize input costs.”
He added that the numbers suggest a gradual shift, not a dramatic reversal.
“It usually happens gradually. It’s not that prices will drop overnight,” he said. “But the downward trend is meaningful, especially for sectors like manufacturing and construction that have been under cost pressure for a while.”
According to Mr. Boateng, businesses in these sectors stand to benefit most from the slowdown in producer inflation. Reduced input costs could allow producers to expand output or ease pressure on pricing, which in turn may help stabilize or reduce consumer prices.
He also cautioned that while PPI changes are important indicators, their impact on consumer pricing depends on several factors, including supply chain dynamics, market competition, and demand patterns.
