Rise in food, fuel prices exerts pressure on inflation

Food and fuel prices continue to stir inflationary pressures. Photo | file 

What you need to know:

This is the fourth month inflation has increased, having risen to 7.9 percent in July 

Inflation rose to 9 percent in August, signaling a continued increase in price of goods and services, which continues to present challenges for a number of households across the country. 

This is the fourth month inflation has increased, having risen to 7.9 percent in July. 

The growth, Uganda Bureau of Statistics (Ubos) indicates has been due to a surge in commodity prices with a number of commodities among which include matooke, milk, dry beans and maize floor all returning increased prices. 

For instance, Ubos indicated that during August, a kilogramme of dry beans increased from Shs3,607 to Shs3,805 while a kilogramme of maize flour increased from Shs3,343 to Shs3,421. 

Fresh cassava increased from Shs827 to Shs914 while green cabbages and watermelon increased from Shs810 to Shs1,012 and from Shs840 to Shs993, respectively. 

During August fuel prices remained relatively stable with a litre of petrol sold at Shs6,563 having risen from Shs6,267 in July. Diesel was quoted at Shs6,192, having increased from Shs6,096 in July. 

The increase comes at a time when government has been making a number of interventions to slow rise in inflation.  

For instance, Bank of Uganda has for four months now increased the Central Bank Rate as a way of calming inflationary pressures. 

In July, Bank of Uganda increased its key policy rate - the CBR - to 9 percent from 8.5 percent to contain inflation and maintain stability of the economy.

This came after Ministry of Finance had cut quarterly releases from 25 percent to 19 percent to support the Central Bank in curbing growth in inflationary pressures.  

Beyond a surge in commodity prices, Ms Aliziki K Lubega, the Ubos director for economic statistics, noted that the increase in inflation had been due to a rise in transport inflation, which during August increased from 7.3 percent to 8.7 percent due to a spike in long distance bus fares which increased to -9.5 percent from -27.8 percent. Inflation for short distance taxi fares, which covers less than 50 kilometres, Ubos indicated also increased to 5 percent from 4.1. 

During the period, solid fuels inflation increased to 4.7 percent from -0.8 percent due to an increase in the price of charcoal, whose inflation rose to 4.8 percent in August up from -0.7 percent in July. 

To fight the increase, government has indicated, it will contain demand for private credit as well as cut expenditure with priority going towards debt servicing and other statutory obligations while investing available resources in enhancing sectors that have a higher multiple effect on economy. 

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