Inflation rate decreases to 5.9 per cent

Kampala

The rate at which commodity prices are rising has continued to slow down, with headline inflation recording a 5.9 per cent rate, according to the April Consumer Price index released last week.

This reflects a 1.6 per cent drop in the annual headline inflation from the 7.5 per cent recorded in March this year. Although the rate at which commodity prices increase has taken a dip, the purchasing power of many Ugandans is still low because prices are still high due to high costs of production.

Also important is that the annual inflation core rate, which excludes the often volatile food crops, fuel, electricity and metered water prices dropped to 5.7 per cent from 6.4 per cent recorded the previous month. The annual food crops inflation rate, which is the main driver of inflation, sharply dropped from 16.8 per cent to 10.7 per cent during the month.

Mr Vincent Nsubuga Musoke, the principal statistician at the Uganda Bureau of Statistics attributed the sharp decrease in the rate of annual food crops inflation to increased supply of food items like maize, matooke and sweet potatoes. “Maize greatly contributes to the food basket in the country and increase in its supply plays a major part in bringing down inflation rates,” Mr Musoke said at the release of the April CPI in Kampala.

Single digit inflation
Maintenance of a single digit headline inflation, falling month after month since January shows a positive trend in Uganda’s economy and good news to investors who will now foot low costs for raw materials, giving them a competitive edge in the region.

The 5.9 per cent headline inflation rate is below Bank of Uganda’s 2009/10 core inflation target of 7.5 per cent by June and just within the 5 per cent rage that the bank targets for core inflation 2010/11 fiscal year. The annual energy, fuel and utilities, however, rose to 3.7 per cent from 1.3 per cent in March following fuel shortages.