E2: Ghana’s Inflation Is Falling, So Why Aren’t Prices?

Last week, I shared my thoughts on mobile money and how it affects Ghanaians trying to build careers, businesses, and financial stability in this economy.

This is episode 2 of What This Finance News Means for  Ghanaians 🇬🇭 where I  break down finance news and then share my thoughts in a simple and practical way.

A few years ago, I could buy a crate of eggs for about 20 cedis. Then it jumped to 50 cedis. Now it’s around 75 cedis depending on where you live. A key contributing factor to this is inflation, holding other factors constant.

Inflation is the continuous rise in the prices of goods and services.

Ghana’s inflation rate last year by this time was 23.1%. Now it’s 3.8%, the lowest it has been since 2021.

That sounds like good news, right? But then why aren’t eggs and other food items getting cheaper?

A fall in inflation does not automatically reduce prices. It just means prices are rising more slowly than before. That’s called disinflation.

For example,  businesses that produced many goods when costs were high have to recover those costs. Prices usually fall only when new goods are produced at a cheaper cost, not the ones made when everything was expensive.

This connects to an important debate raised in Dominic Senayah's article “Disinflation Through Stagnation.” Some economists, including Dr. Samuel Addo, argue that low inflation doesn’t always mean the economy is strong. It may mean people and businesses are simply spending less because money is tight and borrowing is expensive.

In macroeconomic theory, inflation falls either because:

• We’re producing more efficiently – goods and services become cheaper or easier to make. This is healthy because the economy is genuinely growing.
• People are spending less – businesses don’t expand, jobs aren’t created, and incomes stagnate. This can be a warning sign that the economy is slowing down.

The difference matters. Falling prices because of efficiency is good. Falling prices because of weak demand is a signal that the economy isn’t performing as well as the numbers suggest.

Ghana has seen this before. In 1999, inflation fell to 1.4%, one of the lowest levels recorded at the time. It was celebrated as a stabilisation success. However, by the end of 2000, inflation had surged to over 40%.

Low inflation driven by suppressed demand, without real growth in productivity, can be fragile.

That’s why today’s numbers deserve careful interpretation. Many Ghanaians may not feel the celebration around 3.8% inflation because the cost of living remains high. Transport hasn’t returned to 2021 levels. Rent hasn’t reset. And eggs haven’t gone back to 20 cedis.

The real question is not just whether inflation is low. It is why it is low.

Is Ghana in 2026 repeating the 1999 mistake? Is low inflation really a sign of healthy growth, or a sign that demand is weak and the economy isn’t expanding?

How we answer that question will shape jobs, business opportunities, and financial stability for young Ghanaians in the years ahead.