Why Ghanaians Feel Economically Strained Even as Inflation Collapses

By Prof. Samuel Lartey

www.pefghana.org

sammylaatey@gmail.com

Introduction

For many Ghanaians today, the economy feels trapped in a strange and painful contradiction. Official inflation figures are falling dramatically, the cedi appears more stable than before, and policymakers increasingly speak of economic recovery. Yet in markets, lorry stations, shops, pharmacies, schools, and homes across the country, ordinary citizens continue to battle crushing living costs and worsening financial hardship.

This disconnect between official economic statistics and everyday human experience has become one of the defining realities of Ghana’s current economic landscape.

A trader in Makola still struggles to restock goods. A teacher in Kumasi still spends a disproportionate share of their salary on transport and rent. A young graduate in Tamale still cannot afford decent accommodation. A pensioner in Cape Coast still watches food prices consume nearly all monthly income.

The central issue is simple. Inflation may be slowing, but the high prices created during Ghana’s recent economic crisis have not disappeared. The pain remains embedded in the daily lives of households and businesses.

For millions of citizens, survival has become more difficult not because prices are rising rapidly today, but because they already rose too much yesterday.

Ghana’s Inflation Decline and the Reality Behind It

Ghana’s inflation crisis reached alarming levels in late 2022 when headline inflation climbed to 54.1 percent, one of the highest rates recorded in decades. The crisis was fuelled by severe cedi depreciation, rising import costs, external debt pressures, fuel price increases, and global supply disruptions.

Since then, inflation has declined significantly.

According to recent economic data:

            •           Inflation fell to 9.4 percent by September 2025.

            •           Inflation declined further to 5.4 percent in December 2025.

            •           Inflation dropped to 3.8 percent in January 2026.

            •           By March 2026, inflation stood at 3.2 percent, representing one of the lowest rates in recent years.

On the surface, these numbers suggest remarkable economic progress. However, the reality facing consumers tells a more complicated story.

Lower inflation does not mean prices are low. It simply means prices are increasing at a slower pace.

If cooking oil increased from GH¢80 to GH¢150 during the crisis years, and later rises only to GH¢155, inflation has slowed dramatically, but consumers are still paying almost double the previous price.

That distinction is at the heart of Ghana’s present cost of living crisis.

The Cost of Living Crisis Is Now Structural

The hardship facing Ghanaians today is no longer driven only by inflation. It is increasingly structural.

Several fundamental pressures continue to weaken household purchasing power.

1. Food Prices Remain Historically Elevated

Food remains one of the largest household expenses for most Ghanaian families.

Although food inflation has slowed, prices remain significantly higher than pre crisis levels.

Across many urban markets:

            •           A crate of eggs costs far more than it did three years ago.

            •           Tomatoes, onions, and pepper continue to fluctuate sharply.

            •           Rice prices remain elevated due to import dependence.

            •           Bread prices remain high because of flour and energy costs.

            •           Fish and meat have become increasingly unaffordable for lower income households.

For poorer families, this means reduced meal quality, smaller food portions, and growing nutritional insecurity.

The Silent Erosion of Salaries

One of the most painful consequences of the crisis is the collapse of real income value.

Many workers may technically earn more money today than they did in 2022, but that money buys significantly less.

For example:

            •           A worker whose salary increased from GH¢2,500 to GH¢3,200 may appear better off nominally.

            •           However, if rent, transport, utilities, school fees, and food costs doubled during the same period, that worker is economically poorer.

This phenomenon is known as declining real wages.

It explains why workers across both the public and private sectors increasingly complain that salaries finish long before the month ends.

Urban Ghana Is Carrying the Heaviest Burden

The crisis is especially severe in urban centres such as Accra, Kumasi, Takoradi, Tema, and Tamale.

Urban residents depend almost entirely on purchased goods and services. Unlike rural households that may produce part of their own food, urban families buy nearly everything they consume.

As a result:

            •           Rent increases hit harder.

            •           Transport costs become unavoidable.

            •           Utility bills consume larger portions of income.

            •           School fees create severe financial pressure.

            •           Healthcare expenses become more difficult to manage.

Many low income urban households now spend the majority of earnings on survival necessities alone.

Transport Costs Continue to Drain Household Budgets

Even after fuel price moderation, transport remains one of the biggest financial burdens for workers and traders.

Commercial transport fares rarely decline significantly once they rise.

Several factors continue to keep transport costs elevated:

            •           High vehicle maintenance costs.

            •           Expensive spare parts.

            •           Insurance and licensing expenses.

            •           Poor road conditions.

            •           Persistent fuel price volatility.

For workers commuting daily, transport alone now consumes a disturbing proportion of monthly income.

Businesses Are Also Fighting for Survival

The current economic conditions are affecting businesses just as severely as households.

Many small and medium enterprises continue struggling with:

            •           Expensive electricity tariffs.

            •           Weak consumer demand.

            •           High borrowing costs.

            •           Costly imported raw materials.

            •           Reduced profit margins.

            •           Currency uncertainty.

Some businesses have therefore reduced staff, downsized operations, or passed additional costs onto consumers.

This creates a vicious cycle in which:

            •           Consumers buy less.

            •           Businesses earn less.

            •           Prices remain high.

            •           Jobs become insecure.

            •           Household hardship intensifies further.

The Rise of Economic Anxiety

Beyond the numbers lies a growing psychological crisis.

Years of economic instability have created widespread anxiety among citizens.

Today, many households live with constant fear about:

            •           Unexpected medical emergencies.

            •           School fee payments.

            •           Rent renewal periods.

            •           Utility bill increases.

            •           Sudden transport fare hikes.

            •           Food price shocks.

Even when inflation slows statistically, economic insecurity continues emotionally and socially.

This explains why many citizens do not celebrate falling inflation figures. Their lived experience still feels painful.

Why the Poor Feel Inflation More Deeply

Inflation affects all citizens, but it affects poorer households disproportionately.

Lower income families spend larger shares of their earnings on essentials such as:

            •           Food.

            •           Transport.

            •           Rent.

            •           Utilities.

            •           Healthcare.

When these necessities become expensive, poorer households have little financial flexibility.

Middle and upper-income groups may postpone luxury spending during difficult times, but poorer households are forced to sacrifice basic survival needs.

Ghana’s Dependence on Imports Remains a Major Problem

One of Ghana’s deepest economic vulnerabilities remains import dependence.

The country imports large volumes of:

            •           Rice.

            •           Cooking oil.

            •           Poultry products.

            •           Pharmaceuticals.

            •           Industrial inputs.

            •           Machinery.

            •           Fuel products.

Whenever the cedi weakens or global commodity prices rise, local prices increase almost immediately.

This leaves Ghana highly vulnerable to external shocks.

Without stronger domestic production and industrialisation, price instability may continue to recur regardless of temporary inflation improvements.

What Must Change

Ghana’s current economic situation demonstrates that macroeconomic stability alone is insufficient.

The country needs broader reforms focused on improving living standards directly.

1. Expanding Local Production

Greater investment in agriculture and manufacturing can reduce import dependence and stabilise prices.

2. Improving Wage Growth

Workers need income growth that reflects actual living costs rather than headline inflation figures alone.

3. Reducing Utility Costs

Affordable electricity and energy pricing are critical for both households and businesses.

4. Strengthening Public Transport

Efficient and affordable transport systems can reduce financial pressure on urban workers.

5. Supporting Small Businesses

Accessible credit and lower borrowing costs can help businesses expand and create jobs.

Conclusion

Ghana’s falling inflation figures undoubtedly represent an important economic achievement after years of turbulence. However, the celebration of lower inflation must not overshadow the harsh realities confronting ordinary citizens.

For millions of Ghanaians, prices remain painfully high, salaries remain inadequate, and livelihoods continue deteriorating. The economic wounds created during the inflation crisis have not healed simply because the pace of price increases has slowed.

The real challenge before Ghana today is not merely reducing inflation statistics. It is restoring dignity, purchasing power, confidence, and economic hope.

Until households can genuinely afford food, transport, rent, healthcare, and education without constant financial distress, many citizens will continue to feel that the economy is improving only on paper while hardship deepens in real life.

That is the true paradox confronting Ghana today.