Tax Relief and Falling Interest Rates Ease Business Costs, But Local Goods Inflation Signals Pressure Persists — GNCCI CEO

Tax relief measures and declining interest rates have eased production costs for Ghanaian businesses, but rising inflation for locally manufactured goods shows the private sector is "still not out of the woods yet," the Chief Executive Officer of the Ghana National Chamber of Commerce and Industry (GNCCI) has said.

Mark Badu-Aboagye, speaking on Joy News' PM Express Business Edition on Thursday, described the 2026 budget as largely business-friendly and said conditions had improved compared with previous years. "Relatively, business has been good. Things are a bit better as compared to previous years," he said .

He pointed to lower borrowing costs as a source of relief. "And of course we've seen interest rates coming down. So largely, the cost of production is relatively better" .

The Local Goods Paradox

However, Badu-Aboagye cautioned that the gains were uneven. Inflation for locally manufactured goods edged up, signalling continued pressure on domestic producers. "If you look at the numbers, the cost of locally manufactured goods, the inflation for it went up a bit, which should tell you that we are still not out of the woods yet," he said .

The latest Ghana Statistical Service data supports his concern. Locally produced items recorded inflation of 6.9 percent in October 2026, compared with 2.4 percent for imported goods, and accounted for 86.4 percent of the overall inflation rate . The headline rate rose to 5.5 percent, marking a third consecutive monthly increase, driven largely by services inflation, which jumped to 11.5 percent from 8.3 percent in September .

Badu-Aboagye said further tariff relief, alongside the tax measures already implemented, could have lowered the cost of locally manufactured goods and pushed inflation lower .

Business Restraint and Exchange Rate Stability

The GNCCI chief linked the moderation in headline inflation partly to restraint in business pricing, noting that firms had not been increasing prices excessively. He also identified exchange rate stability as a significant contributor to the inflation outcome, alongside improved production costs .

When challenged by the host over whether the national average masked divergent consumer experiences, Badu-Aboagye acknowledged regional disparities but defended his use of the average. "No, so that's why we use the average. So the national average is 5.5 per cent," he said . The Ashanti Region recorded the highest regional inflation at 9.7 percent, while the Northern Region registered negative 0.5 percent .

Budget Measures Underpinning Relief

The 2026 budget introduced a series of tax reforms aimed at easing business costs, including a reduction in the effective VAT rate from 21.9 percent to 20 percent, the abolition of the COVID-19 Health Recovery Levy, and an increase in the VAT registration threshold to GH¢750,000 . The Finance Ministry projected these measures would return approximately GH¢3.7 billion to individuals and businesses in 2026 .

The Bank of Ghana has maintained its policy rate at 14 percent since March, with the next decision scheduled for November 18 . With inflation rising for three consecutive months, the latest figures may influence the central bank's assessment of price pressures.