Energy, Shilling depreciation push inflation to 9.1 per cent

Kampala- The depreciation of the Shilling in the last three months and last month’s increase in electricity tariff have continued to push inflation in Uganda upwards to 9.1 per cent for the year ending November 30, from 8.8 per cent recorded in October.

Uganda Bureau of Statistics (Ubos), a body charged with the responsibility of regulation and production of national statistics, said yesterday both the annual headline inflation (includes food crop items in the consumer price index basket ) and core inflation (excludes food crop items, metered water and energy) registered an increase due to prevailing market conditions, which have seen the price of some items increasing marginally.

This signifies that the general public is faced with the problem of higher cost of energy and high prices for some items amidst low value of the Shilling to purchase goods and services.

Releasing the Consumer Price Index (CPI) for the month of November at Statistics House, the director of macroeconomic statistics at Ubos, Dr Chris N Mukiza said:

“The increase in electricity tariffs and the pass through of the depreciation of the shilling against US dollar in the last three months have contributed to the rise in Uganda’s inflation rate.”
Currently, 150 Killowatts of electricity cost Shs112,937 while I litre of petrol increased from Shs3,731 to Shs3,737.

Dr Mukiza said in November that the annual energy, fuel Utility (EFU) inflation rose to 12.1 per cent for the year ending November compared to 11.9 per cent registered during October.
“The rise in prices for some food crops also contributed to the rise inflation over the last 12 months. During the period, the annual food crops inflation increased to 20.3 per cent compared to 20.2 per cent recorded in October,” he said.

For the case of annual core inflation, which the Central Bank uses to determine Uganda’s inflation, Dr Mukiza said it increased from 6.3 per cent in October 2015 to 6.7 per cent in November.

Among the food crops items that registered increase in prices are: Sweet potatoes, cassava, pumpkins, avocado, greens, tomatoes, onions, beans, maize flour, fish and sugar.

For instance, an average price for a kilo of tomatoes in Kampala increased from Shs1,995 in October to Shs2,023 in November, sugar from Shs3,500 to Shs3,800, onions increased from Shs2,994 a kilo to Shs2,997, a kilo of cassava flour increased from Shs1,153 to Shs1,272, avocado Shs1,439 to Shs1,456 a kilo.

Bank of Uganda in October tightened its monetary policy by increasing the Central Bank Rate (CBR) to 17 per cent to control the anticipated rise in inflation.
The managing director of Alpha Capital, Mr Stephen Kaboyo, told Daily Monitor in an interview that Bank of Uganda’s inflation forecasts as outlined in the last monetary policy statement point to a higher level than the average seen in the last couple of years with the key risk being the effects of the depreciation of the Shilling.

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