Overview:
Latest data from the Uganda Bureau of Statistics (UBOS) shows annual headline inflation rose to 3.7 percent in June, up from 3.2 percent in May, 3.0 percent in April and 2.9 percent in March. Although inflation remains below the Bank of Uganda's medium-term target of 5 percent, the latest figures point to mounting price pressures largely driven by energy costs.
Uganda’s inflation accelerated to its highest level in four months in June as persistent increases in fuel prices filtered through transport and other consumer costs, underscoring the growing impact of Middle East supply disruptions on the domestic economy.
Latest data from the Uganda Bureau of Statistics (UBOS) shows annual headline inflation rose to 3.7 percent in June, up from 3.2 percent in May, 3.0 percent in April and 2.9 percent in March. Although inflation remains below the Bank of Uganda’s medium-term target of 5 percent, the latest figures point to mounting price pressures largely driven by energy costs.
Pump prices for both petrol and diesel have remained elevated, ranging between Shs6,300 and Shs6,700 per litre during the second quarter of 2026, compared to around Shs5,000 per litre in Kampala before supply disruptions emerged at the end of February.
The disruptions followed escalating conflict in the Middle East, which tightened global oil supplies and increased the cost of transporting petroleum products to import-dependent countries such as Uganda.
UBOS data indicates that inflation for energy, fuel and utilities climbed to 11.9 percent in the 12 months to June from 9.1 percent in May.
Fuel prices recorded the steepest increase, with annual inflation rising to 26.2 percent in June from 16.6 percent the previous month. Diesel prices increased even faster, posting annual inflation of 37.3 percent compared to 27.5 percent in May.
The surge in fuel costs spilled over into the transport sector, with passenger transport fares rising by 11.9 percent in the year to June, up from 9.9 percent recorded a month earlier.
The increase was reflected in higher bus and taxi fares on many routes across the country as transport operators passed rising fuel costs on to commuters in an effort to preserve operating margins.
Outside transport, food prices presented a mixed picture.
While overall food crop inflation remained unchanged at zero percent, declines in the prices of matooke, beans, carrots and onions helped offset increases in the cost of commodities such as beef and rice.
Matooke prices continued to ease, with annual inflation improving to negative 6.6 percent from negative 3.4 percent in May, largely reflecting seasonal harvests and improved market supplies.
Despite the recent acceleration, inflation remains within the Bank of Uganda’s target range, prompting policymakers to maintain the Central Bank Rate at 9.75 percent.
However, Bank of Uganda Governor Michael Atingi-Ego has warned that inflation risks remain tilted to the upside, citing uncertainty surrounding global geopolitical developments and weather-related shocks that could affect domestic food production.
The central bank has particularly highlighted the conflict in the Middle East as a key external risk.
Any prolonged disruption to shipping routes through the Strait of Hormuz could delay fuel deliveries, increase freight and insurance costs and further raise domestic pump prices. Rising global crude oil prices have also increased refinery costs, adding pressure to retail fuel prices in importing countries.
Analysts say a prolonged conflict could sustain upward pressure on transport, manufacturing and production costs, potentially reversing recent gains in inflation stability if global oil markets remain volatile.