Inflation in Uganda continues to fall towards 5%

September 4, 2017 in Markets, Policy by Editor

September 4— Both the Annual Headline Inflation and Annual Core Inflation for the year ending August 2017 fell to 5.2 percent and 4.1 percent respectively indicating the Bank of Uganda may not make a dramatic changes to the Central Bank Rate (CBR) anytime soon.

The BoU tracks the Annual Core Inflation rate as one measure to determine the rise or fall of the CBR or leave it unchanged. The CBR is presently at 10% with Core Inflation below the 5 percent benchmark the BoU uses to determine any CBR changes.

Headline inflation, which started out the year at 5.9 percent  in January, went down to 5.2 percent from the 5.7 percent in July. The Core Inflation declined to 4.1 percent in the same interlude compared to the 4.5 percent previously.

Uganda Bureau of Statistics (UBOS) says the the Headline drop is due to a decline in the Annual Food Crops Inflation which recorded at 11.8% in August 2017 compared to 12.9% in July 2017.

The leading driver was lower prices for fruits in most parts of country with the inflation on this item falling to 17.4% last month compared to the 24.2% registered during  July 2017.

According to UBOS, Annual Core Inflation declined to 4.1 percent for the year ending August 2017 compared to the 4.5 percent recorded for the year ended July 2017. This drop was due to Services Inflation that decreased to 3.3 percent for the year ending August 2017 compared to 4.0 percent recorded for the year ended July 2017.

In addition, Other Goods Inflation declined to 4.6 percent for the year ending August 2017 compared to the 4.9 percent recorded during the year ended July 2017.

In a news conference  last week, Sam Kaisiromwe, a senior statistician at UBOS said these figures can be used by the public to determine on what and where to spend as well as explain price differences across the country.

“This information is given monthly so that employees especially those who have bargaining powers can use them to demand for an increase. For example, if there is an increased inflation in the transport sector, or housing, it means that your transport fare or your rent will probably increase,” Kaisiromwe said.

He asked the public to show interest in such issues because this  is what determines the economic status of any country.

Like the previous month, inflation headline by income groups and geographical areas showed that districts of Fort Portal and Arua registered the highest Annual Inflation of 9.2 percent for the year ending August 2017 though lower than 9.9 percent recorded for the year ended July 2017 and 8.9 percent for the year ending August 2017 compared to 7.7 percent recorded for the year ended July 2017 respectively.

Gulu district registered the third highest annual inflation of 7.9 percent for the year ending August 2017 though lower than 9.0 percent recorded for the year ended July 2017.   This drop is driven by Annual Inflation for Food and non-alcoholic beverages that registered 18.1 percent for the year ending August 2017 compared to the 19.3 percent recorded for the year ended July 2017.

Jinja and Kampala high income areas suffered the least inflation The second highest inflation was registered in Arua The main driver was high Annual Inflation for Food and nonalcoholic beverages that registered 17.7 percent for the year ending August 2017 compared to the 15.1 percent for the year ended July 2017.

The report also shows that  Inflation decreased in sectors like in communication, recreation and culture while remaining stable in sectors like clothing and foot ware and restaurants and hotel.

However there was a slight inflation percentage increase in sectors like education, by 0.5%, transport by 0.1%, health by 0.5%, real estate by 0.5%, foods by 0.7 and alcoholic  beverages by 0.2%.