Optimism as Uganda’s February inflation drops to 9.2%

The annual inflation for February 2023 has dropped to 9.2% from 10.4% recorded in January 2023, a report by Uganda Bureau of Statistics (UBOS) shows.

According to the report, which was released on Tuesday, 28 February 2023, the reduction was prompted by reduction of prices of major food items such as maize flour, rice and matooke as well as a drop in fuel prices.

According to UBOS, annual maize flour inflation has slowed to 53.3% from 90.8% of Jan 2023. Annual laundry soap inflation slowed to 21.5% from 51.4% of Jan 2023; matooke inflation slowed to 61% from 72.4% of Jan 2023 while that of green pepper slowed to 15% from 43.5% of January 2023.

Petrol inflation dropped  by 1.5% in February.

The annual core inflation has slowed to 7.8% from 9.0% recorded in January 2023.

The highest Inflation was recorded in Arua at 13.8% followed by Gulu at 12.3%. The least inflation was realised in Kampala high income at 6.8%.

This comes after an African Development Bank report released in January said despite slowing growth and the worst inflation figures in a decade in 2022, African economies remain “resilient,” and double-digit price hikes are expected to ease.

Last week, Mr David Livingstone, Citi chief executive officer for Europe, Middle East and Africa, said the growth outlook in Uganda has improved remarkably over the last few months following tight monetary policy by the central bank.

“There has been good management of inflation … here in Uganda and therefore there are expectations that inflation will continue to go down and that will allow policy rates to reduce as the central bank builds confidence,” he said.

Inflation was one of the biggest challenges in 2022 as the global economy and particularly Uganda, remained volatile due to geopolitical and ecological challenges.

The challenges impacted global and national economies, thus a slowdown in growth and a sharp increase in inflationary pressures.

Inflation that soared to multi-decade highs, prompted rapid monetary policy tightening and squeezing household budgets, just as Covid-19 related financial support was waning.