Overview:
UBOS says the peak in price levels over the last 12 months to July was largely fueled by increases in prices of commodities under core inflation - with the most price increases seen in the cost of cassava flour and maize flour.
Ugandan households are battling severe price pressures from soaring commodity prices which are approaching inflation levels last seen in about seven years, according to official data.
The July Consumer Price Index released by the Uganda Bureau of Statistics (UBOS) on July 29 shows that annual inflation rose to 7.9% in July from 6.8% posted in June 2022.
Record price increases in fuel prices coupled with the dry session have pushed commodity prices higher over the last two months.
UBOS says the peak in price levels over the last 12 months to July was largely fueled by increases in prices of commodities under core inflation – with the most price increases seen in the cost of cassava flour and maize flour.
“Most commodities have registered increases. We are using a lot of Maize flour in so many areas. These commodities also need to be transported and the fuel prices have also increased. All that is factored into the pricing,” Aliziki Lubega, director, economic statistics at UBOS, said.
Cassava flour’s annual inflation increased to 62.3% from 31.2% in June. The average retail price of one kilogram of cassava flour has peaked at sh2,354 in July from sh1,512 in July 2021, an increase of more than 55%.
Maize flour (one kilogram) has increased to sh3,343 from sh1,957 in July 2021, representing a 70% price jump in the period.
Maize flour and Cassava are traditionally enjoyed across Uganda and are staple food to the biggest section of the population.
The Statistics body also highlighted the current dry session as a key factor pushing prices upwards.
“Our food is mainly rain-fed and we have all seen what is happening currently. Is the supply meeting the demand that is available?” Lubega said.
Petrol inflation increased t0 56.1% in July, up from 45.9% in June, adding to the pressure on motorists and business costs.
The new inflation is likely to see the Bank of Uganda (BOU) move to tighten monetary policy further to keep inflation in check.
BOU increased its policy rate for borrowing from 7.5% to 8.5%. The measure is part of BOU’s attempt to contain surging inflation that has surpassed its medium-term target of 5%.
Speaking during the Uganda Development Forum annual conference on July 28, Michael Atingi-Ego, BOU deputy governor said will continue to increase its benchmark lending rate or policy rate to curb inflation.
“We need to rein in on this inflation before it gets out of control because if it gets out of control it will be very expensive, very painful and it will take a longer time to bring it under control.
“I know that there are people complaining out there as to why we are raising the central bank rate when inflation is supply driven. If inflation that was initially contained in a few items like soap, cooking oil and fuel begins to spread into other commodities and you begin to see that prices of many commodities are beginning to increase, that is the right time you need to act,” Atingi-Ego said.