Decline in prices drives down inflation to 6.2%

A decline in both commodity and service prices contributed to decline in headline inflation to 6.2 percent from 8 percent in May, Uganda Bureau of Statistics (Ubos) has indicated. 

The decline implies that consumer prices have relaxed a bit and gives hope that Bank of Uganda could consider reducing the Central Bank Rate since core inflation has also dropped to 5.6 percent from 6.8 percent.

The 5.6 percent rate is much closer to Bank of Uganda’s target of 5 percent. 

Presenting the Consumer Price Index in Kampala yesterday, Mr Godfrey Magona, the Ubos  senior statisticians prices statistics, said the main drivers in the food category was maize flour inflation, which declined to 28 percent from 49.4 percent in April and rice inflation, which declined to 35.3 percent from 42.2 percent. 

Cassava flour inflation dropped to 50.3 percent from 69.3 percent while laundry soap bar and refined oil inflation dropped to - 9.7 percent from 6 percent and - 11.1 percent from - 9 percent. 

The other drivers included annual food crops and related items inflation, which dropped to 15.7 percent from 25.3 percent due to a reduction in tomatoes inflation to - 26.2 percent from 26.3 percent and cooking banana inflation, which dropped from 46.3 percent to 34.8 percent.  

Beans inflation dropped to 40.1 percent from 45 .1 percent while services inflation declined to 3.4 percent from 4.3 percent April. 

The drop in services inflation, Mr Magona said was due to a decline in transport inflation, which decelerated to - 0.3 percent in May from 3.9 percent.  

Annual energy fuel and utilities inflation slowed down to 0.9 percent in May from 2.1 percent due to a decline in liquid energy fuels inflation, which dropped to - 4.4 percent from 2.1 percent in April.  Diesel inflation dropped to – 9 percent in May compared to 7.3 percent in April, while petrol inflation slowed to – 7 from - 2.9 percent in April. 

Geographically, Arua registered the highest inflation of 11.6 percent, followed by Gulu with 7.8 percent, while Mbarara registered the lowest at 4.9 percent.

Movement of prices 

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