For some time, economic discussions in Ghana have focused primarily on local inflation, the rising costs of domestically produced goods and services. Analysts and policymakers have been weighing factors such as production costs, transportation expenses, and market inefficiencies to understand inflationary trends.
However, while much attention has been placed on domestic price movements, imported inflation has been steadily increasing and it may soon become an even bigger concern.
According to the data from the Ghana Statistical Service (GSS), inflation on imported goods has been climbing since August 2024, moving from 16.1% to 17.0% in September, then to 17.6% in November, 17.9% in December, and finally hitting 18.4% in January 2025.
This means that within just five months, imported inflation has increased by about 14.3%. Meanwhile, local inflation, which had dropped to 22.2% in August, rebounded to 26.4% in December before slightly easing to 25.7% in January 2025.
This widening gap between local and imported inflation raises important questions. Why are imported prices rising so fast?
A key factor driving the increase in imported inflation is exchange rate depreciation. The Ghanaian cedi has faced continued pressure, making imports more expensive. As of February 5, 2025, the interbank exchange rate stood at 15.45 GHS per USD, reflecting a decline in the cedi’s value over recent months.
This depreciation means that businesses importing goods—from essential commodities such as fuel and food to industrial materials—are paying significantly more in cedi terms than before. These increased costs are subsequently passed on to consumers, contributing to the overall rise in imported inflation.
The depreciation trend has been evident for several months. In September 2024, the cedi was trading at 15.80 per USD. However, by October, it had weakened further to 16.30 per USD, representing a 3.2% decline in just one month. November and December provided temporary relief as the cedi strengthened to 15.27 and then to 14.70 per USD, a move that briefly eased some import cost pressures.
However, the recovery was short-lived, as the exchange rate dropped again in January 2025, reaching 15.06 per USD, signaling renewed volatility in the currency market.
This depreciation has had direct consequences on the price of imported goods. As the cedi loses value, importers require more local currency to purchase the same amount of foreign goods, increasing costs across multiple sectors. Essential commodities such as fuel and food have been among the hardest hit, with businesses forced to adjust their prices accordingly.
Fuel, which is a major determinant of transport costs, has seen periodic price increases, feeding into higher costs for goods and services across the economy. Manufacturers who rely on imported raw materials have been forced to adjust their pricing strategies, either absorbing higher costs or passing them onto consumers.
Beyond the exchange rate, global economic factors have also played a role in driving up the cost of imported goods. Persistent supply chain disruptions, heightened shipping costs, and inflation in Ghana‘s major trading partners—including China, the United States, and Europe—have resulted in rising costs across multiple product categories.
Even in cases where global commodity prices have shown some stability, logistical challenges and geopolitical tensions have continued to impact trade, making imported goods more expensive for Ghanaian businesses and consumers.
The rise in imported inflation, though modest in January, underscores concerns about Ghana’s exposure to external economic shocks, particularly in sectors heavily reliant on imports. Unlike local inflation, which policymakers can attempt to manage through monetary tightening, subsidies, or domestic production incentives, imported inflation remains largely beyond the country’s direct control.
Last Updated on March 16, 2025 by samboad
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