Reduction in food prices pushed inflation down

Uganda’s headline inflation rate slowed to 25.7 percent in January from 27 percent a month earlier, the third straight decline, helped by a 2.3 percent drop in food prices from a month earlier.

The Uganda Bureau of Statistics (UBOS) also told a news conference the core rate of inflation, which excludes food crops, fuel, electricity and metred water, slowed to 28.1 percent from 29.2 percent in December.

The headline inflation rate in the east African country was driven higher by food and fuel prices and peaked last year at 30.4 percent in October, prompting the central bank to ramp up its key lending rate to 23 percent.

Declines in food and fuel prices since then have helped bring down the headline inflation rate steadily, although some analysts expect the Bank of Uganda to leave its key rate unchanged at a rate setting meeting on Wednesday.

“On a monthly basis, reduction in prices were recorded for matoke, sweet potatoes, tomatoes, pineapples, and sugar … as a result the composite food group index dropped by 2.3 percent,” UBOS said in a statement.

“The decrease in prices of charcoal, petrol, paraffin and transport fares recorded in most centres also contributed to the overall reduction in the headline inflation rate,” it said.

Reuters

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