Tax Analyst cautions falling inflation signals slower price rise, not price drop
Tax analyst Richard Amo-Hene has cautioned that Ghana’s declining inflation rate should not be mistaken for a drop in the prices of goods and services.
His comment comes after fresh data from the Ghana Statistical Service (GSS) showed inflation dropped to 13.7 percent in June 2025, the lowest since December 2021, marking six consecutive months of decline in consumer price inflation.
Speaking on ZED 101.9FM’s current affairs program, The FOCUS, Mr. Amo-Hene clarified widespread misconceptions about the country’s inflation trends.
He noted that while many Ghanaians are celebrating the significant drop in inflation, it does not automatically translate into lower market prices.
“What we have not done well to understand is that when inflation is dropping, it does not mean that prices are reducing. It only means that the rate at which prices are increasing is slowing down,” Mr. Amo-Hene said.
He explained that the public often confuses declining inflation with lower prices.
Mr. Amo-Hene explained: “If you bought an item for GHS 200 last month, and inflation drops, it doesn’t mean the price will fall to GHS 180. It may still rise, say to GHS 210, but had inflation remained at 50 percent, that same item might have cost GHS 290 by now.”
He stressed that for prices to truly begin falling, inflation must reach zero and turn negative, what economists refer to as deflation.
“As long as inflation is a positive number, it means prices are still going up. Only the speed of the increase has slowed,” the tax analyst clarified.
The June 2025 GSS data indicates a broad slowdown in both food and non-food inflation. Food inflation dropped to 15.4 percent from 17.9 percent in May, while non-food inflation eased to 12.1 percent.
The slowdown was influenced by lower transportation and utility costs, a stable cedi, and relative price stability in fuel and energy.
Despite optimism around the inflation figures, Mr. Amo-Hene warned against placing immediate pressure on producers to cut prices.
“Most producers are still recovering from high operational and input costs. We need consistent low inflation over time before we can expect actual price reductions,” the tax analyst stated.
He acknowledged that the economy is on the right track but advised consumers to manage their expectations.
“A stable inflation environment gives room for wages to catch up and for businesses to plan better. That’s when competition, not cost pressure will begin to influence pricing,” the tax analyst remarked.
Mr. Amo-Hene concluded that although the decline in inflation is a positive development, it will take time before average Ghanaians experience real price relief.
