Social media tax pushes inflation to 3.1 per cent - Ubos

Kampala. The introduction of Shs200 daily tax on social media for each user has pushed up Uganda’s annual headline inflation to 3.1 per cent from 2.1 per cent.
Uganda Bureau of Statistics (Ubos) said this during the release of the Consumer Price Index (CPI) for the year ending July, at Statistics House yesterday.

The Ubos director of macroeconomic statistics, Dr Chris Mukiza, said the OTT tax has made people’s expenditure on communication services to rise in the last one month, resulting in movement index from zero per cent to 20.3 per cent.

“However, its impact on inflation is likely to remain where it is because it is a fixed rate,” he said.
Dr Mukiza said the OTT tax has hit Kampala the most, with all the income groups registering a rise in inflation because social media is mostly used by people in the city.

“Kampala high income registered the highest annual inflation of 5.0 per cent for the year ending July 2018 compared to 3.0 per cent recorded for the year ended June 2018. The second highest inflation was registered in the Kampala low income group at 3.3 per cent for the year ending July 2018 compared to 2.2 per cent recorded in the year ended June 2018,” he said.

Dr Mukiza said the Kampala middle income class registered the third annual inflation of 3.2 per cent for the year ending July 2018 compared to 1.8 per cent for the year ended in June.

Cause
Overall, Ubos explained that the increase in annual headline inflation is largely attributed to the annual core inflation that rose to 2.5 per cent for the year ending July 2018, compared to the 0.8 per cent registered for the previous year.

“It points out that this increase was due to annual services inflation that registered 4.1 per cent for the year ending July 2018 compared to 1.7 per cent recorded for the year ended June 2018,” he said.

During the period under review, Ubos says communications inflation registered 5.4 per cent from the year ending July 2018 compared to minus 14.4 per cent recorded in the previous year due to introduction of the social media tax.

In addition, he said transport inflation registered 12.1 per cent for the year ending July 2018 compared to 8.0 per cent recorded in June 2018.

The rise in transport inflation is due to rise in international oil prices and taxes on oil and depreciation of the Shilling against the dollar in the first half of July 2018.

Dr Mukiza added that the rise in oil prices at the international market has seen air transport become expensive as well as the taxi fares.

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