Inflation drops to 1.7 per cent

Uganda’s inflation for the year ended August 31 dipped to 1.7 per cent the lowest in more than six years on the back of reducing food prices. The August Consumer Price Index (CPI) from the Uganda Bureau of Statistics indicates that inflation fell from 3.2 per cent in July to 1.7 per cent in August 2010, the lowest rate since July 2004, when inflation stood at 1.8 per cent.

Annual core inflation
During the month under review, annual core inflation, which excludes food crops, fuel, electricity and metered water also went down to 4 per cent compared to 4.6 per cent in July.
Despite the reduction in headline inflation, the food price index rose by 0.8 per cent due to increases in prices of bananas, Irish potatoes, fruits, beans, fresh milk and refined oil.
Mr Ronald Ssombwe, a senior officer in charge of CPI, said although there was plenty of supply to the markets in July due to increased production, inadequate rainfall and lack of storage facilities decreased food supplies in August.

Food crop inflation
The monthly food crop inflation rate rose by 3.8 per cent in August compared to a drop of 4.9 per cent registered in July due to low supplies that led to increases in prices of sweet potatoes, maize flour, ground-nuts and sugar.

Decreases in prices were, however, registered for sweet potatoes, cassava, maize flour, ground nuts and sugar. The monthly headline inflation rose by 0.5 per cent during the period compared to a 0.3 per cent drop registered in July.

Arua and Gulu centres registered deflation rates of 4.4 per cent and 2.6 per cent compared to Kampala’s high income, middle and low centres that registered inflation rates of 4.0 per cent and 2.7 per cent respectively.

Increases in prices were also recorded in petrol, paraffin , charcoal, firewood, some household items and secondhand clothes.