Accra: Dr. Johnson Pandit Asiama, the Governor of the Bank of Ghana, has expressed optimism about inflation reaching the Central Bank's medium-term target of 8 plus or minus 2 percent by the end of 2025 despite risks from a possible utility tariff hike. The Central Bank Governor made this statement at the 126th Monetary Policy Committee (MPC) press briefing in Accra, where the monetary policy rate was reduced by 350 basis points to 21.5 percent from 25 percent.
According to Ghana News Agency, the Electricity Company of Ghana (ECG) has proposed a 225-percent increase in its distribution service charge, while the Ghana Water Company Limited has called for a 280-percent hike as consultations continue for the Multi-Year Tariff for 2025 to 2030. The ECG cited the need to prevent financial collapse and maintain a reliable electricity supply, while GWCL said the increase was necessary to address rising production costs driven by illegal mining and water pollution.
Dr. Asiama acknowledged that an upward adjustment to tariffs could impact the ongoing disinflation process but expressed confidence that the current macroeconomic conditions and monetary policy actions could keep inflation trending downwards. The Committee maintained that inflation would continue to ease in the near term and in the outlook, predicting that headline inflation is expected to drop to within the medium-term target by the end of the fourth quarter of 2025.
Despite potential upward reviews of utility tariffs exerting some price pressures, the maintenance of an appropriate monetary policy stance, strong sterilization efforts, ongoing fiscal consolidation, and adequate reserve buffers are expected to sustain the disinflation process. Dr. Asiama emphasized that utility price adjustments are a necessary step for the sustainability of the energy sector, adding that targeted subsidies and programs to enhance energy efficiency would mitigate the burden on Ghanaians.
The sustained decline in core inflation reflects the effectiveness of policies in stabilizing the economy, supported by improvements in global commodity prices of oil and food. Other factors supporting Ghana's disinflation process include projected agricultural benefits from favorable weather conditions and government support, which could bolster food supply and dampen price pressures.
The government's fiscal consolidation efforts, supported by the International Monetary Fund (IMF) under Ghana's Extended Credit Facility, are also expected to reduce deficit financing and support macroeconomic stability. The IMF has backed an upward adjustment by utility companies, indicating its importance in fixing inefficiencies and attracting investment into the electricity sector.
However, President John Dramani Mahama, addressing public concerns, stated that the government does not favor the proposed tariff increases by ECG and GCWL. He emphasized the government's commitment to exploring alternative measures to raise necessary resources without burdening consumers and highlighted reforms introduced to make ECG financially sound and efficient.
Ghana's inflation rate has been on a decline, reaching 11.5 percent in August 2025, down from 12.1 percent in July 2025, a trend sustained for eight consecutive months. This decline has been driven by factors such as prudent monetary policy, strong liquidity management, appreciation of the cedi, fiscal consolidation, and improved food supply, as noted by the Ghana Statistical Service.