By Frederick OFORI-MENSAH
Ghana is no stranger to inflation. For decades, the country has wrestled with price instability, often triggered by external shocks, fiscal imbalances, or sharp currency depreciation.
But a new — and arguably more troubling — pattern has emerged in recent years: the growing tendency for prices to remain permanently high, even when the underlying factors that caused them to rise have been corrected.
Take the Ghanaian cedi. After months of volatility and severe depreciation, recent data from the central bank shows the local currency has regained some strength, particularly against the US dollar.
Logically, one might expect this to translate into lower prices for imported goods and, by extension, a general easing of consumer costs. But that is not happening. Prices remain firmly stuck at elevated levels.
This concern is not just anecdotal. It has now been acknowledged by the Ghana Union of Traders Association (GUTA) itself — an umbrella body of Ghana’s commercial traders and shop owners.
In a rare and commendable move, GUTA has publicly urged its members to begin reducing their prices to reflect the improving exchange rate. The message was simple: “If the cedi depreciating leads to higher prices, then its appreciation should equally lead to lower prices.”
Yet the response from the market has been tepid at best. It raises a fundamental question about how pricing works in Ghana — or more accurately, how it doesn’t work. We seem to have developed a one-directional pricing culture: upward.
The egg case: inflation as a permanent state
Consider the example of eggs — a basic food item in almost every Ghanaian home. Just four years ago, a crate of eggs cost around GH¢11. Today, that same crate sells for as high as GH¢80. Even after the cost of poultry feed has stabilized globally, and despite some easing in transportation costs, egg prices have remained firmly in the stratosphere. Why?
Because in Ghana, prices rarely go down once they’ve gone up. It’s a kind of economic stickiness that has now become a cultural norm — and it is devastating for households. This is not unique to eggs.
The same is true for sachet water, rice, tomatoes, construction materials, and even transportation fares. The moment there is a spike in fuel, forex, or imported input costs, prices shoot up. But when those same cost pressures ease, nothing changes. This behavior is both irrational and dangerous.
The real problem: moral hazard and market indiscipline
At the heart of this lies what economists call moral hazard — the idea that some actors behave recklessly because they know there are no consequences. In Ghana, this means traders and suppliers hike prices when costs rise but refuse to lower them when costs drop, knowing there is little regulation, weak consumer pressure, and no accountability.
It’s become a structural defect in our economy — and it’s hurting everyone. GUTA’s statement is a significant step forward, but it also reflects a harsh reality: the leadership recognizes the reputational damage being done by price rigidity, and the risk of public frustration boiling over. Yet their appeal may fall on deaf ears because this isn’t just about foreign exchange — it’s about profit-maximization habits that have been normalized over time.
A broken pricing culture
We have cultivated a pricing culture where every shock — real or imagined — is used as a justification to increase prices, but no effort is made to recalibrate when stability returns. Traders cite the cedi when it depreciates, but ignore it when it appreciates.
Fuel increases justify fare hikes, but fuel reductions are dismissed as “not significant enough.” Suppliers blame global crises but never adjust pricing when those crises abate. In the end, the consumer always loses. And more critically, trust in the economic system erodes.
The policy dilemma
What makes this even more problematic is that traditional policy tools — interest rate adjustments, fiscal tightening, or currency stabilization — lose their effectiveness in such an environment. If inflation expectations are entrenched and pricing behavior doesn’t adjust to policy signals, then economic management becomes a lopsided game. A strong cedi should reduce the cost of imports. Lower fuel prices should reduce transport costs. But when pricing is sticky, none of these gains are passed on to the end user — and the economy operates in a distorted and inefficient manner.
What can be done?
The answer lies in a multi-pronged approach:
1.1 Consumer empowerment – Ghanaians must be educated and mobilized to demand accountability. We need active consumer associations, price-tracking apps, and a new public consciousness that challenges exploitative pricing.
1.2 Transparent market data – Government should publish clear commodity cost build-ups so that the public knows when prices are unjustified. Why should the price of cement stay high when clinker costs have fallen? Or why should rice still be priced like it’s being flown in from Mars?
1.3 Regulatory discipline – Authorities must be willing to confront sectors that engage in unjustified price manipulation. Soft appeals — like GUTA’s — are welcome, but harder enforcement mechanisms may be necessary in cases of persistent abuse.
1.4 Fair pricing incentives – The state can reward companies and sectors that lower prices through tax breaks, public procurement opportunities, or visibility campaigns. Incentivizing ethical behavior can work alongside penalties.
Final thoughts
GUTA’s call to traders is refreshing, but it must not stand alone. It should be a rallying point for a broader national conversation about how we price goods and how we protect consumers.
We cannot allow “what goes up must stay up” to become an economic doctrine. Ghana needs a new ethos — one that links fairness to pricing, that values integrity in business, and that responds to improvements with as much enthusiasm as it reacts to crises.
The cedi is rising. It’s time prices start falling too.
>>>the writer is an experienced investment advisor with 15+ years in portfolio management, financial research, and corporate advisory, holding advanced expertise from London Business School and Cass Business School. He can be reached via [email protected]
