Tuesday, May 31, 2011


Persistent increase in food prices coupled with imported inflation have continued to make it difficult for government to bring down the country’s fast-rising inflation rate.
Currently, Uganda’s annual headline inflation stands at 16 per cent moving from 14.1 per cent in April 2011. The Uganda Bureau of Statistics said yesterday that this is the highest inflation rate Uganda has seen since May 1994 when the annual inflation was 16.2 per cent.
“Commodity food prices have continued to be the main driver of inflation in the country due to reduced supply and increased demand for food items,” said Mr Vicente Nsubuga Musoke, the principal statistician-price statistics, while releasing the Consumer Price Index (CPI) for May 2011. Annual food inflation increased from 39.3 in April to 44.1 in May.
The annual core inflation excludes food crops from the CPI and it is also what government uses to determine the overall inflation rate. The annual core inflation rose to 11.3 per cent in May up fromApril’s 9.7 per cent rate.
This means that the current core inflation rate has more than doubled government’s policy of keeping it at five per cent. The causes of the increase of core inflation are as result of energy, fuel and utilities which registered an annual increase of 9.1 per cent in May compared to 8.9 per cent in April.
The persistent increase in the inflation rate implies that the general public is faced with high cost of living. Still, the economy is experiencing inflationary pressures and this is putting government in the spotlight as the public becomes increasingly anxious about the rising cost of living.
According to the Finance ministry, government’s primary macroeconomic objective is to promote broad-based and sustainable economic growth, consistent with the quest to transform the country into middle income status in the medium to long-term.
Uganda imports a lot of goods from China and India, especially pharmaceuticals while it imports most of its consumer goods from Kenya. The inflation rate in China was last reported at 5.3 per cent in April of 2011 while in the inflation rate in India was last reported at 8.82 per cent in March of 2011.
In Kenya, the inflation rate increased to 13 per cent in May 2011, from 12.1 per cent in April 2011. The Assistant Director Research at Bank of Uganda, Dr Jacob Opolot, said the Central Bank is pressing ahead with tight monetary policy to avoid the second round effects of the inflation.