Uganda's Inflation Climbs as Fuel Prices Surge Past 30%

Uganda is experiencing a notable surge in its annual inflation rate, climbing to 3.2 percent in the 12 months leading up to May 2026, a slight increase from the 3.0 percent recorded in April. This upward trend is primarily attributed to a sharp rise in fuel prices at the pump.

In February, a litre of petrol was priced at Shs5,080. However, by May, the cost had escalated by Shs1,539, representing a cumulative increase of over 30 percent. Major fuel retailers are now selling petrol at approximately Shs6,619 per litre and diesel at around Shs6,490.

The Uganda Bureau of Statistics (Ubos) reported that annual inflation for liquid energy fuels dramatically increased to 16.6 percent in May, more than doubling from 7.7 percent in April. This has consequently pushed annual Energy, Fuel, and Utilities (EFU) inflation to 9.1 percent. Petrol prices saw a 16.6 percent annual rise, while diesel inflation jumped to 21.5 percent, and kerosene experienced a substantial 25.4 percent increase.

According to Ubos head of macroeconomic statistics, Samuel Echoku, these price hikes are largely a consequence of the ongoing conflict in the Middle East, which has disrupted global oil supply chains. Tensions around critical transit routes like the Strait of Hormuz have driven up international crude oil and refined product prices. As a net fuel importer, Uganda faces increased costs due to higher import expenses, freight charges, and insurance premiums.

The knock-on effects are evident across various sectors. Annual services inflation rose to 4.6 percent, largely driven by a 10.6 percent increase in passenger transport charges. Higher fuel costs inevitably translate into increased operational expenses for businesses, transportation, and reduced purchasing power for consumers.

While some food prices have eased, offering a slight reprieve, analysts caution that these gains could be negated if fuel prices continue their upward trajectory. The Ministry of Finance has indicated measures to mitigate the impact, including centralized fuel procurement and the deployment of strategic fuel reserves to stabilize supply.

https://www.monitor.co.ug/uganda/business/markets/fuel-price-surge-pushes-up-inflation—5479652