Lower Inflation does not mean Lower Prices.
Ghana's inflation rate has been declining, but prices remain high due to cumulative inflation. The decrease in inflation rate does not necessarily mean lower prices, as it only measures the rate of price increase, not the actual price level.
In Ghana, inflation has been declining after a period of intense price increases. The annual inflation rate fell from 39-40% in 2023 to 20-23% in 2024. However, prices remain high due to cumulative inflation. The inflation rate measures how fast prices are increasing, not whether they are high or low. For example, the price of rice has continued to rise, even with falling inflation. Transport fares also remain elevated due to past fuel price increases. The concept of cumulative inflation explains why many households feel that the cost of living is still high, despite the decline in inflation rate.
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