Uganda's inflation eases slightly below central bank target in March
TLDR
- Consumer prices in Uganda declined in March due to decreases in food and related items and a moderation in energy inflation.
- The consumer price index showed a 3.3% increase over the past 12 months, with a 0.5% uptick from the previous month.
- Core inflation in Uganda remained steady at 3.4% in the year to March, with services inflation increasing due to higher transport fares and mobile money charges.
In March, consumer prices in Uganda saw a decline, attributed to decreases in food and related items, along with a moderation in energy inflation, as reported by the Bureau of Statistics.
The consumer price index, reflecting the overall level of prices paid by households for goods and services, showed a 3.3% increase over 12 months, with a 0.5% uptick from the previous month. In February, inflation had risen by 3.4% year-on-year and 0.5% month-on-month.
Core inflation, considered a key indicator by the central bank, remained steady at 3.4% in the year to March, consistent with the previous month's rate. Services inflation saw an uptick, propelled by increases in passenger transport fares and mobile money charges. Conversely, inflation in other goods rose at a slower pace compared to February.
Key Takeaways
In response to currency depreciation and mounting inflationary pressures, the Bank of Uganda has announced a significant hike in its Central Bank Rate (CBR) to 10%. This proactive measure comes amidst challenges posed by a depreciating shilling, escalating inflation rates, and a turbulent global economic environment. The decision to raise the CBR aims to address these economic challenges by potentially attracting foreign investment and bolstering the shilling's value. Concurrently, it seeks to mitigate domestic demand to curb inflationary pressures. However, there are potential downsides, as such a policy adjustment may also stifle economic growth by constraining consumer spending and investment.
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