High service charges drive up  inflation 

Inflation remained low by the close of 2023 but is starting to increase. Photo / File 

What you need to know:

  • The increase from 2.6 percent in December last year breaks the reducing cycle of inflation of about 10 months 

Inflation increased to 2.8 percent in January due to an increase in service charges.  The increase from 2.6 percent in December last year breaks the reducing cycle of inflation of about 10 months. 

During January Uganda Bureau of Statistics also indicated that core inflation, which excludes the volatile items such as energy (electricity), fuel and metered water also increased to 2.4 percent compared to 2.3 percent due to services inflation, which rose to 3.9 percent from 3.7 percent in December. 

Inflation affects both businesses and consumers in terms of demand for goods and services.  However, it far lower than the 10.4 percent, at which inflation had risen in January 2023.  

Ms Alizike Kaudha Lubega, the Uganda Bureau of Statistics (Ubos) director of macroeconomic statistics, said the increase in services inflation was due to passenger transport by taxi and hired car inflation that increased to 5.6 percent from 2.1 percent.

Domestics flights charges increased by 2.3 percent from 2.1 percent, while church wedding fees rose by 30.7 percent from 9.5 percent. 

Ubos also indicated that other goods inflation had remained stable at 1.3 percent food crops inflation rose to 2.6 percent from 2.5 per cent due to an increase in vegetables, tubers, plantains, cooking bananas and pulse inflation, which rose to 2.2 percent from 1.4 percent.  

Cooking bananas prices increased to 1.4 percent from - 11.4 percent, while green cabbage prices increased by 10.7 percent in January from - 7 percent. Green pepper prices increased by 4 percent from - 6.6 percent.  

Ms Alizike said the changes in prices were brought about by seasonal factors, which has seen supply of some products reduce in the market.    

Energy Fuel and Utilities inflation rose to 7.4 percent from 6.4 percent due an increase in the petrol prices by 4.4 percent in January compared to 0.6 percent in December.

Firewood prices increased by 9.4 percent compared to 7.3 percent while diesel reduced to - 6.6 percent from - 9.1 percent.