Ghana’s inflation gains slash borrowing costs as lending rates fall by over 11 percentage points – World Bank

Ghana’s progress in bringing inflation under control has translated into a significant reduction in borrowing costs, with average lending rates dropping by more than 11 percentage points in just one year, according to the World Bank.

The development was highlighted in the World Bank’s 10th Ghana Economic Update, which said the sharp decline in inflation had created room for the Bank of Ghana to ease monetary policy and reduce the cost of credit.

Average lending rates fell from approximately 27% in June 2025 to 15.6% by June 2026, representing a substantial improvement in financing conditions for households and businesses.

The Bank of Ghana’s policy rate also recorded a steep decline during the period. It was reduced from 28% in April 2025 to 14% by March 2026, representing a cumulative reduction of 1,400 basis points. The rate was subsequently maintained at that level through July.

Inflation falls to historic low

The World Bank described Ghana’s disinflation in 2025 as particularly significant, noting that headline inflation fell from 23.2% in February to 5.4% by December.

The December figure represented the lowest inflation rate recorded in Ghana since 1999.

The report attributed the rapid improvement to a combination of tight monetary policy, a 28.9% appreciation of the Ghanaian cedi and declining food prices.

The decline in inflation, the World Bank said, also helped improve broader financial conditions, making access to credit more favourable for both consumers and businesses.

Fresh inflation pressures emerge

Despite the progress, the World Bank warned that Ghana’s price stability remains vulnerable to external shocks and supply-side pressures.

Inflation declined further to 3.2% in March 2026 but subsequently increased to 5.3% by June.

According to the report, the renewed increase was partly driven by higher import costs for food and energy, rising prices of energy and fertiliser, as well as climate-related disruptions affecting production.

The conflict in the Middle East also contributed to higher fuel prices, increasing operating costs for transport companies, manufacturers and agro-processing businesses.

World Bank urges protection of gains

In response to the renewed pressure on prices, the government introduced a temporary fuel price relief measure aimed at cushioning households and businesses from the impact of higher fuel costs.

The World Bank, however, cautioned that the recent rebound in inflation highlights the importance of preserving the gains achieved during Ghana’s rapid disinflation period.

It stressed the need for continued vigilance to ensure that external shocks and supply-side pressures do not reverse the progress made in restoring price stability and improving financial conditions.