Uganda’s August inflation edges up as food, fuel prices bite

KAMPALA. Uganda’s annual headline inflation rose slightly in August as higher food prices and persistent fuel costs continued to put pressure on household budgets, reversing the marginal easing recorded in some price categories.

Annual headline inflation increased to 4.1 per cent in the year ending August, from 4.0 per cent in July, according to the latest Consumer Price Index released yesterday by the Uganda Bureau of Statistics (UBOS).

The increase was mainly driven by higher core inflation and prices of food crops and related items, Principal Statistician in charge of Price Statistics at UBOS, Ms Juliet Nakayenga, said.

Annual core inflation, which excludes some volatile items, rose to 3.5 per cent in August from 3.4 per cent in July.

Ms Nakayenga attributed the increase to higher prices of rice, dried fish, maize flour and cassava flour.

Food crops and related items inflation also accelerated, rising to 2.1 per cent from 1.6 per cent in July.

The increase was driven by higher prices of Irish potatoes, pineapples, mangoes and matooke, she said.

The latest figures point to renewed pressure on the cost of basic household consumption even as some services and energy-related items recorded slower price increases.

Annual Energy, Fuel and Utilities (EFU) inflation eased to 14.3 per cent in August from 14.9 per cent in July.

However, fuel prices remained significantly elevated. Annual petrol inflation stood at 28.5 per cent, compared with 29 per cent in July, while kerosene inflation was 31.1 per cent, down from 31.86 per cent.

Charcoal inflation also slowed to 2.1 per cent from 4.5 per cent.

Services inflation fell to 4.5 per cent from 4.8 per cent, partly because of slower increases in international airfares and hairdressing services.

Inflation for international flights declined to 17 per cent from 24.1 per cent, while hairdressing inflation fell to 0.8 per cent from 3.7 per cent.

Regional differences

The national figure masks significant differences in the cost pressures faced by households and businesses across the country.

Kampala’s high-income group recorded the highest annual inflation among the geographical areas and income groups measured by UBOS, at 4.9 per cent, although this was slightly lower than the 5 per cent recorded in July.

The increase was largely associated with higher prices in information and communication, as well as alcoholic beverages, tobacco and narcotics.

Information and communication inflation among Kampala’s high-income households rose to 2.5 per cent in August from 0.7 per cent in July, while inflation for alcoholic beverages, tobacco and narcotics increased to 2 per cent from 0.8 per cent.

Jinja Centre recorded the second-highest annual inflation at 4.8 per cent, up from 4.2 per cent in July.

UBOS attributed the increase largely to food and non-alcoholic beverages, whose inflation rose to 4.1 per cent from 2.5 per cent.

Information and communication charges also increased sharply, with inflation in the category rising to 6.1 per cent from 1.9 per cent.

Mbale Centre recorded the third-highest annual inflation at 4.3 per cent, up from 3.8 per cent.

Kampala’s middle-income group followed at 4.1 per cent, compared with 3.7 per cent in July.

Masaka Centre recorded inflation of 4 per cent, slightly lower than the 4.1 per cent recorded in July, while Arua’s inflation increased to 3.4 per cent from 2.8 per cent.

Gulu Centre was among the areas where inflation eased, declining to 3 per cent from 3.3 per cent.

Mbarara Centre recorded the lowest annual inflation among the areas highlighted by UBOS, at 2.9 per cent, down from 3.2 per cent in July.

Ms Nakayenga said the decline was partly driven by slower inflation in housing, water, electricity, gas and other fuels, which fell to 1.4 per cent from 2.6 per cent.

“In addition, annual transport inflation registered 1.3 per cent in August compared to 2.3 per cent registered in July 2026,” she said.

BoU cautious

The slight rise in headline inflation comes as the Bank of Uganda maintains a cautious approach to monetary policy, citing uncertainty over global energy prices and other external risks.

Bank of Uganda Governor Dr Michael Atingi-Ego said the central bank had revised its inflation forecast downwards, with core inflation projected to average 4 per cent to 4.5 per cent over the next 12 months.

Headline inflation is projected to average 5.5 per cent to 6 per cent over the same period.

However, Dr Atingi-Ego warned that higher food, fuel and other input costs could generate broader inflationary pressures.

“Therefore, clarity on the inflation outlook, particularly its path and underlying drivers, is needed before considering further policy action,” he said.

The Monetary Policy Committee consequently maintained the Central Bank Rate at 9.75 per cent, allowing policymakers more time to assess global developments and their implications for domestic prices.

The central bank said inflation risks remain tilted to the upside.

These include renewed global inflation that could trigger higher interest rates in major economies and put depreciation pressure on the Uganda shilling.

Geopolitical tensions could also disrupt global supply chains, raise international oil prices and increase domestic energy and transport costs.

Poor weather could further push up food prices by reducing agricultural production.

However, favourable weather and improved food supplies could ease inflation, while weaker domestic economic growth could reduce demand-side price pressures.

UBOS measures inflation using four main indices: headline inflation, core inflation, food crops and related items, and Energy, Fuel and Utilities.

Headline inflation covers all goods and services in the consumer basket, while core inflation excludes highly volatile items such as food crops, fuel and utilities.