Uganda Inflation slows to 25.4 percent in Feb 2012

1-March-2012


Experts have predicted it will be impossible for Uganda’s inflation to drop to single digit figures at the end of this year c
onsidering the slow pace at which it is falling.

Last year the central bank and government had projected that the country would towards the end of this year have
stabilized inflation to single digit figures.

The Consumer Price Index (CPI), the official measure of inflation which was released by the Uganda Bureau of Statistics
yesterday indicates that inflation reduced by 0.3 percentage points from 25.7 per cent in January to 25.4 per cent in February.


This is the fourth month in a row that inflation is moving downwards, however, the movement would marginally impact the prices of goods and services. Inflation for instance reduced from 30.4 per cent in October 2011 to 29 per cent in November, 27 per cent in December and 25.7 per cent in January 2012.

Ubos director in charge of Macroeconomic Statistics, Dr Chris Ndatira Mukiza attributed the marginal drop to price reductions that were registered mainly for sugar and second hand clothes due to the rebound made by the shilling against major currencies especially the dollar.

Economic Monitoring minister, Henry Banyenzaki, however, said: "It is pessimism to say we would achieve single digit inflation by the end of the year. This is not an overnight job,’ adding, " ‘the current inflation trend is positive for the country.’

Mr David Lambert Tumwesigye, an economist also echoed similar sentiments saying that inflation does not rise over night and so it should not be expected to slow down to single digits overnight. He said with food supply shocks in the country, inflation is expected to remain high until productivity constraints are addressed.

Food inflation during the period under review increased to 27.7 per cent from 27.2 per cent due to the January - February dry spell that affected market supply of fresh fruits and vegetable.

Notable price increases were registered for oranges, pineapples, passion fruits, cabbage, green pepper, tomatoes, eggplant, milk and fish in most centres.
Dr Mukiza, also warned that Uganda’s agriculture being dependent on weather, the country still faces an upside risk of rising food inflation.

Core inflation, which excludes food crops, fuel, electricity and metred water which are volatile to price changes, slowed down from 28.1 per cent in January to 26.3 per cent in February due to the appreciation of the shilling and reduction in fuel prices.

The shilling is said to have appreciated by about 6 per cent since the start of the year, although it is now seen slowly succumbing to depreciation pressures in the past few days.

It was for example Shs2,363/2,373 per dollar buying and selling respectively, yesterday, weaker than the Shs2,315/2,325 buying and selling on February 24, 2012.

By Faridah Kulabako: The Monitor Newspaper