Africa’s return to single-digit inflation gathers pace as currencies stabilise

After years of elevated and, in some cases, runaway inflation, a growing number of African economies are beginning to re-enter single-digit territory, signalling a tentative but meaningful shift in the continent’s macroeconomic trajectory.

Over the past five months, four formerly high-inflation economies — Ghana, Ethiopia, Zambia and Zimbabwe — have returned to single-digit inflation for the first time in recent years, driven by tighter monetary policy, currency stabilisation, and, in some cases, structural reforms backed by multilateral lenders. 

Their return places them alongside countries such as South Africa, Kenya, and Tanzania, which have largely maintained inflation within manageable bounds despite global shocks.

The trend reflects a broader deceleration in price pressures across the continent. The World Bank estimates that the number of African economies recording single-digit inflation will rise from 27 in 2022 to 37 by 2025, underscoring the scale of the disinflation now underway.

“Consumer price inflation has continued to recede across most sub-Saharan African countries, albeit at varying speeds,” the Bank said in its latest Africa’s Pulse report. “The projected acceleration in growth in 2025 is underpinned by improved terms of trade across much of the region, contributing to currency stabilisation and, in some cases, appreciation.”

The easing of inflation has allowed several central banks to begin cautiously unwinding aggressive tightening cycles introduced to combat post-pandemic price surges, currency selloffs, and imported inflation. According to the multilateral lender, declining inflation is supporting household purchasing power and creating room for gradual rate cuts, helping to revive private consumption and investment.

“These favourable conditions are fueling a recovery in private consumption and investment,” it added, although it cautioned that fiscal consolidation efforts could moderate the pace of recovery in some economies.

Regional growth is expected to strengthen. After bottoming out in 2023, sub-Saharan Africa’s economy is projected to expand by 3.8 percent in 2025, up from 3.5 percent in 2024, before accelerating to an average of 4.4 percent in 2026–27, the Bank said.

The return of single-digit inflation across parts of the continent also signals more than temporary relief—it marks a shift toward macroeconomic credibility, policy discipline, and renewed investor confidence. 

Ghana: From crisis to credibility

Among the recent returnees to single-digit inflation, Ghana was the first to cross the threshold. Inflation slowed to 9.4 percent in September, the first single-digit reading since August 2021, following a sharp currency rebound and a surge in gold prices. Since then, inflation has continued to decelerate.

Data from the country’s statistical service show that the general price level slowed for a twelfth consecutive month to 5.4 percent in December, returning firmly to the central bank’s 6–8 percent target band. The turnaround marks a dramatic reversal from December 2022, when inflation peaked above 54 percent during the height of the country’s balance-of-payments and currency crisis.

Bloomberg data also show the cedi recorded its first annual gain against the US dollar since at least 1994, supported by record gold prices and broad dollar weakness. The rally represents a sharp shift for a currency that had depreciated persistently for over a decade amid fiscal slippages and external financing pressures.

The improved inflation and currency backdrop has allowed policymakers to ease emergency tightening measures without destabilising markets. BusinessDay previously reported that Ghana emerged as Africa’s most aggressive rate cutter in 2025, with the Bank of Ghana slashing its benchmark policy rate by 1,000 basis points, from 27 percent to 18 percent between January and November — the lowest level since April 2022.

“The cedi also appreciated, becoming the best-performing currency against the dollar this year, driven by higher gold prices and the innovative ‘GoldBod’ programme, which has substantially increased Ghana’s foreign exchange inflows,” analysts at Africa-focused market research and advisory firm SBM Intelligence said.

Growth has responded. Africa’s biggest gold producer expanded by 5.5 percent year-on-year in the third quarter, supported by a recovery in agriculture and services. External support has also strengthened, with the International Monetary Fund completing the fifth review of Ghana’s loan programme and unlocking an immediate $385 million disbursement.

The country’s early repayment of a $709 million Eurobond has further bolstered investor confidence in its reform path.

Ethiopia: Reform-led disinflation

Africa’s second most populous nation ended last year with a single-digit inflation rate for the first time in seven years, as headline inflation fell to 9.7 percent in December, marking the seventh consecutive monthly decline.

Inflation had exceeded 30 percent through much of 2023 and early 2024, driven by supply constraints, currency pressures and higher global commodity prices. The recent moderation reflects the early impact of reforms under a four-year IMF programme, including tighter monetary policy and the adoption of a market-based foreign-exchange regime.

March marked a key turning point. Inflation, which had hovered near 30 percent for almost three years, fell to 13 percent, a shift the World Bank directly linked to reforms under the $3.4 billion IMF programme signed in July 2024, including the floating of the birr and progress on debt restructuring.

Export earnings were forecast to double, remittances to rise by 25 percent, and foreign-exchange reserves reportedly tripled from pre-reform levels — a remarkable shift for an economy that until recently rationed FX on a survival basis.

“Ethiopia’s economic narrative in 2025 is defined by reform-led stabilisation, a gradual cooling of inflation, and the cautious opening of one of Africa’s most tightly controlled markets,” SBM Intelligence said. “The government’s reform programme is anchored on currency liberalisation, capital-market development and renewed external financing.”

Still, challenges remain. Exchange-rate volatility and FX shortages continue to fuel imported inflation, and the World Bank recently ranked Ethiopia among Africa’s weakest-performing currencies in early 2025. Structural constraints are expected to limit the speed of further disinflation.

External backing has reinforced the transition. In July, Ethiopia secured $1 billion in World Bank financing, with the lender signalling up to $5 billion over three fiscal years, contingent on continued reform delivery.

Zimbabwe: A historic milestone

In Zimbabwe, inflation fell to single digits in January 2026 for the first time since 1997, marking a milestone in the country’s decades-long struggle with hyperinflation and currency instability.

The Southern African country’s central bank data revealed that prices slowed sharply to 4.1 percent, from 15 percent in December, extending a six-month disinflation streak. Inflation has fallen dramatically from 85.7 percent in April last year, highlighting the scale of the recent turnaround.

“This marks a historic moment for Zimbabwe,” finance minister Mthuli Ncube said in an emailed statement to Bloomberg on Monday. “It comes nearly three decades after the country last recorded single-digit inflation in its domestic currency.”

The slowdown is closely tied to the introduction of the Zimbabwe Gold (ZiG) currency in April 2024, backed by gold and foreign assets. ZiG represents Zimbabwe’s sixth attempt since 2009 to establish a functional local currency and reduce reliance on the US dollar.

Authorities say sustained single-digit inflation is essential to plans to make ZiG the sole legal tender by 2030. The central bank has set benchmarks, including maintaining price stability and building reserves sufficient to cover three to six months of imports.

According to Ncube, foreign assets backing ZiG rose to $1.2 billion by December 2024, from $276 million at launch. He said the government would continue pursuing “well-coordinated monetary and fiscal policies” to entrench stability and avoid a repeat of past hyperinflation episodes.

Zambia: Strong kwacha and copper ease inflation

Zambia also emerged as another Southern African economy benefiting from falling inflation, currency strength and favourable commodity dynamics.

Annual inflation eased to 9.4 percent in January, down from 11.2 percent in December, marking the first sub-10 percent reading since January 2023, according to the Central Statistical Office.

Sheila Mudenda, acting statistician-general, said the slowdown reflected easing price pressures across both food and non-food components. Food inflation fell to 10.9 percent, while non-food inflation slowed to 7.3 percent.

Currency strength has played a central role. The kwacha, Africa’s second-best performing currency last year, has gained about 16 percent against the dollar since December, supported by central bank measures and record-high copper prices.

Copper accounts for more than 70 percent of Zambia’s export receipts and roughly a quarter of government revenue, helping stabilise external balances and reduce imported inflation. The IMF this week approved a $190 million disbursement, closing Zambia’s current financing programme and clearing the way for fresh talks.

Nigeria: The next candidate?

Nigeria has not yet rejoined the single-digit club, but signs of disinflation are emerging. Headline inflation stood at 15.15 percent in December following a methodological review by the National Bureau of Statistics, while food inflation — which accounts for more than half of the inflation basket — eased to 10.84 percent.

Inflation has slowed for nine consecutive months, raising expectations that Africa’s most populated country could return to single-digit inflation for the first time since 2016, possibly as early as the first or second quarter.

Before the statistical revisions, inflation was projected to fall to single digits within the next three years, according to the Nigerian Economic Summit Group.

“We should be looking at a single-digit inflation by 2029. This shows that we have consolidated our macroeconomic gains,” said Olusegun Omisakin, NESG’s chief economist, during the launch of the group’s 2026 Macroeconomic Outlook in Lagos.