Uganda's inflation shoots to 18%

Saturday July 30, 2011

Uganda's year-on-year inflation rate rose to 18.7 percent in July from 15.8 percent in June, the Uganda Bureau of Statistics said on Friday.

The Uganda Bureau of Statistics (UBOS) said the headline inflation rate rose to 18.7 percent from a revised 15.7 percent in June. The monthly headline index jumped 2.2 percent in July compared with 0.1 percent a month earlier.

The inflation rate in June had eased for the first time in eight months helped by a fall in food prices, but analysts said that decline was likely to be temporary as the country was entering a long dry spell that would exhaust food supplies.

"Food crops remained the main driver of inflation because they have the highest weight in the basket," the UBOS said in a statement.

"This is the highest (inflation rate) since February 1993, when it was 24.9 percent."

Food crop prices jumped 42.1 percent in the year to late July, up from 39.0 percent in the year to the end of June, the data showed.

The Bank of Uganda launched a new benchmark lending rate and announced inflation targets on July 6 to tame the price pressures that have pushed inflation in the east African nation.

The bank said it would target 5 percent core inflation in the "medium term" without giving a specific time frame, and it set its new central bank rate (CBR) at 13 percent for July.

Reuters