The Ministry of Finance and Economic Planning says December 2012 inflation of 8.8 per cent, announced on Wednesday shows a drop in three consecutive months.
It also marks 31 consecutive months of single digit inflation.
The Ministry said inflation has stabilised in single digit within 31 months due to the prudent fiscal policy of the government and continued monetary restraint, which had helped anchored inflationary expectations and partly lowered food prices which placed a lid on headline inflation.
This was contained in a release signed by the Media Liaison of the Ministry, Mr Abdul Hakim Ahmed, and copied to the Ghana News Agency on Wednesday in Accra.
It said the drop in inflation in three months running was mainly on account of the decline in food inflation.
It said food inflation rose steadily from 4.3 per cent in February 2012 to 5.5 per cent in July and fell steadily, reaching 3.9per cent in December.
It said the development was however in clear contrast to the belief of some commentators who were less optimistic and predicted that inflation was likely to return to double-digit zone by the end of the year at the back of higher petrol and electricity tariff increases, a weaker domestic currency, and higher food prices.
"These commentators have got a pushback on their view of double-digit inflation by end-2012because of their over-estimation of the potential pass-through effect of the weaker cedi and higher oil prices to headline inflation," the release said.
The decline in inflation provides concrete evidence of an economy that was growing at a fast rate and creates a conducive environment for businesses to plan on long term basis, thereby enhancing business investment, which has helped put the economy on a higher growth path.
The release noted that the decline had also supported the local currency which experienced some turbulence in the first half of 2012 to enhance investors confidence in it.
It said the value of the cedi which depreciated cumulatively by 17 per cent in November 2012 has since stabilised, with some intermittent periods of appreciation.
"Similarly, the decline in inflation in three months running up to the end of the year has meant an increase in real interest rates. This, together with the stability in the cedi has improved the attractiveness of cedi assets relative to foreign assets."
The release said: "The medium to long term outlook for inflation is more promising. With a strong economic growth forecast, tight fiscal stance, current levels of interest rates, and greater exchange rate stability, we expect inflationary pressures in the country to remain moderate and inflation to drop to five per cent in the medium term. In the end, however, inflation will continue to be heavily influenced by food prices."