Producer Price Inflation falls to 10.25% in May

Ghana’s Producer Price Inflation (PPI) fell significantly to 10.25 percent in May 2025, marking the lowest year-on-year increase in ex-factory prices since November 2023, when the rate stood at 1.7 percent.

The sharp drop from 18.53 percent recorded in April 2025 represents an 8.28 percentage-point decline in a single month.

This dramatic moderation in the prices producers receive for goods and services is being welcomed as a potential turning point for Ghana’s inflationary pressures, especially in the industrial and manufacturing sectors, which have recently faced high input costs and unstable pricing.

According to the Ghana Statistical Service (GSS), the two primary drivers of the May decline were the Mining and Quarrying sector, contributing 10.6 percentage points, and the Manufacturing sector, contributing 9.5 percentage points. Together, they accounted for 78.7percent of the total slowdown in the PPI rate.

“This presents a critical window for stabilization, investment, and responsible spending across sectors of the economy,” the GSS noted in its release.

Stability Returning Across Key Industries

The GSS report indicated that most sectors are now experiencing price stability or marginal declines, leading to an overall optimistic outlook for the second half of 2025. It noted that the decline in producer inflation could offer relief to businesses grappling with high operating costs and unstable supply chains over the past two years.

“The consistent drop in inflationary pressures at the producer level offers a foundation for renewed investor confidence and better pricing decisions,” noting: “we will continue to track price trends closely and provide timely updates to support informed policymaking.”

Implications for Businesses

For the private sector, the statistical agency advised businesses to review their cost structures and adjust prices to remain competitive amid easing input costs. Firms that previously held back on investment or expansion due to cost volatility were encouraged to resume paused projects, especially in industries aligned with manufacturing, agriculture, and mineral extraction.

“With input inflation falling, businesses now have leverage to renegotiate better loan terms with financial institutions. A stable pricing environment also creates room for strategic pricing and expansion,” the GSS added.

Policy Signals for Government

The report also includes targeted recommendations for government action, urging the fast-tracking of key policy initiatives such as the Gold Board and the Agriculture for Transformation Agenda, which aim to enhance import substitution and stabilize the exchange rate.

Furthermore, the GSS encouraged government departments to utilize granular, sub-sector data from the PPI report to inform trade and industrial policy decisions, especially in light of ongoing efforts to expand local production capacity and attract foreign investment into strategic industries.

Advice for Households and Consumers

While the benefits of reduced producer inflation take time to filter to the retail level, households are also expected to feel some relief. The GSS called on consumers to avoid panic buying, shop strategically, and increase savings, now that prices of many goods and services are either rising slowly or declining.

“This is not the time for unnecessary stockpiling. We urge the public to remain calm and responsive to actual market signals,” the GSS advised.

Looking Ahead

The unexpected scale of the decline in May suggests a potential turning point in Ghana’s inflation trajectory. While consumer price inflation remains elevated due to past cost pressures and exchange rate volatility, the falling producer inflation could be an early indicator of broader economic recovery.

Economists say that if the trend continues in the coming months, the Bank of Ghana may come under pressure to reconsider its tight monetary stance, which has kept interest rates high in a bid to curb inflation.

May 2025 Producer Price Index Highlights:
• PPI Rate: 10.25 percent (Year-on-Year)
• April 2025 PPI: 18.53 percent
• Major Contributors: Mining & Quarrying (10.6 ppts), Manufacturing (9.5 ppts)
• Historical Context: Lowest rate since Nov. 2023 (1.7 percent)
• Outlook: Positive; most sectors experiencing price stability or reduction