Uganda’s inflation rate sees modest improvement in 2024

Kampala, Uganda – Uganda’s inflationary landscape has shown a mix of modest improvements and persistent challenges in 2024, according to the latest data from the Uganda Bureau of Statistics (UBOS).

The Annual Average Headline Inflation for 2024 was recorded at 3.3 percent, a significant drop from the 5.4 percent registered in 2023.

This improvement reflects a combination of price stability in key sectors and a deceleration in core inflationary pressures, driven by reduced costs in energy, utilities, and food.

However, despite this relative stability, there are critical details to consider.

The overall inflation rate was largely influenced by Annual Core Inflation, which registered an average rate of 3.6 percent, down from 4.7 percent in 2023.

While prices of essential commodities and services, such as clothing, household equipment, and healthcare, remained relatively stable, areas such as restaurants and accommodation services experienced inflationary spikes.

The inflation rate for these services rose to 4.8 percent in the year ending December 2024, up from 3.8 percent in the same period the previous year.

The food sector has been a mixed bag in 2024. While the Annual Food Crops and Related Items Inflation remained negative at -0.7 percent, it represented a notable improvement from the -4.0 percent seen in November.

Declines in prices of key staples like fresh beans, maize flour, and rice contributed to this trend, though price stability was offset by rising costs for other items such as matooke, tomatoes, and avocados.

Energy and fuel costs, a critical factor influencing Uganda’s economy, recorded significant volatility.

Annual Energy, Fuel, and Utilities (EFU) Inflation stood at 1.0 percent in December, down from 2.2 percent in November. While lower charcoal prices contributed to this decline, fluctuations in liquid fuel prices, especially petrol and diesel, remained a concern.

Improved agricultural yields due to favourable weather conditions contributed to increased crop production, alleviating the pressure on food prices. However, challenges remain, particularly with perishables like tomatoes and onions, which saw significant price swings.

Policy interventions, such as measures introduced by the Bank of Uganda to manage liquidity and curb inflationary pressures, have been effective.

Interest rate policies and government subsidies in certain sectors also played a role in stabilizing costs.

Despite these gains, Uganda’s inflationary environment continues to exhibit vulnerabilities.

The service sector, including transportation and accommodation, remains susceptible to inflationary pressures, with passenger transport prices increasing steadily over the year.

Similarly, costs in education and healthcare, both essential sectors, registered minimal declines but remain high relative to household incomes.