Inflation is Down: Why Are Prices in Ghana Still High?

We hit a major milestone in September 2025 with the first single-digit inflation since 2021 (9.4%), followed by a dip to 5.4% in December. Now, as of January 2026, it’s hit a remarkable 3.8%.

But shopping at Makola or Kejetia market has you wondering: “If the numbers are dropping, why are my expenses still so high?

The answer lies in a simple but often misunderstood economic truth: A falling inflation rate is not the same as falling prices.

Why inflation does not result in falling prices.

Using the fictional example from our infographic, let’s look at how the math actually works for a common good like a bag of rice:(Disclaimer: * Prices used are fictional and for educational purposes only.)

Year 1: Low Inflation (Baseline)

• Price of rice: GH₵200

• Inflation: 5%

• Prices are stable and manageable.

Year 2: Inflation Spike

• Inflation jumps to 50%

• Price of rice rises sharply to GH₵300

• This is when people really feel the pressure.

Year 3: Inflation Falls

• Inflation drops to about 3.3%

• Price of rice rises slightly again to GH₵310

Even though inflation fell sharply, the price did not return to GH₵200. It only increased more slowly.

What Does Falling Inflation Really Mean?

A common misunderstanding is that falling inflation means prices should fall. But that is not what inflation measures.

Inflation shows how fast prices are increasing, not whether prices are going up or down.

So when inflation drops from 9.4% to 3.8%, it means:

Prices are still rising - just more slowly than before.

Think of it like driving a car:

• High inflation = your foot is hard on the accelerator.

• Falling inflation = you ease off the accelerator.

• The car is still moving forward (prices still rise), just at a slower speed.

Why Prices Don’t Come Down Immediately

There are several reasons why prices remain high even when inflation falls:

1.  Past price increases tend to stick

Once prices go up due to high inflation, businesses rarely reduce them unless there is strong competition or lower costs.

2. Import costs are still high

Ghana imports many goods, including fuel and food inputs. Exchange rate pressures and shipping costs keep prices elevated.

3. Businesses protect their margins

After surviving high inflation, many sellers keep prices high to cover earlier losses and future uncertainty.

What This Means for Ghanaians in 2026

The drop to 3.8% is a significant milestone for Ghana. It suggests that the period of "price shocks", where costs seemed to change every week, is finally stabilizing.

While it doesn't mean your grocery bill will shrink overnight, it does mean your money is losing its value much more slowly. The "car" has slowed down; now, we wait for wages and the broader economy to catch up to the distance we've already covered.

Want to keep up with the numbers that matter? Follow Finex Insights for more clear breakdowns of the Ghanaian economy.