Uganda's Inflation Stable Amid Rising Energy Pressures

Uganda’s inflation remains manageable, with core inflation easing to 2.9 percent in March from 3 percent the prior month, according to Uganda Bureau of Statistics (Ubos) figures. Headline inflation stays below the Bank of Uganda’s 5 percent target, largely due to softer food prices.

Food crop inflation dropped to 1 percent year-on-year from 1.8 percent, driven by declines in items like fresh milk (-4 percent), passion fruits (-4.7 percent), and pineapples (-0.7 percent). Monthly food inflation held at a low 0.3 percent.

However, this calm masks emerging challenges. Some food prices are rebounding, with tomatoes up to 6.6 percent, Irish potatoes at 5.2 percent, and watermelons surging to 12.9 percent, linked to higher transport expenses.

Energy inflation is accelerating sharply, reaching 4.1 percent from 2.7 percent. Solid fuels jumped to 10.5 percent, with charcoal at 16.2 percent and firewood at 8.1 percent. Petrol inflation rose to 4.4 percent and diesel to 3 percent.

Global factors exacerbate this: crude oil prices climbed nearly 40 percent, LNG and fertilizers also rose steeply, inflating import costs. The shilling weakened from Shs3,751 to Shs3,760 before a slight recovery to Shs3,747, fueled by dollar demand from importers.

Currently, food stability counters energy and currency pressures, but analysts foresee a gradual uptick in inflation as fuel costs permeate transport and goods pricing.

Source: Daily Monitor (Uganda)