Inflation Up As Uganda Shilling Falls

Prices of products has been on the rise

Last March, Ugandans paid higher prices for goods and services compared to February, the Uganda Bureau of Statistics (Ubos) has said.

Core inflation, which measures the changes in prices of goods and services less food and utilities, rose to 3.7 per cent for the year ending March 2015 compared to 3.3 per cent registered a month before.

The local currency continued to weaken against the dollar, further heightening fears of more inflationary pressures.

Ubos said: “An increase in prices was observed in clothing and cement in most centres during the month.” A lot of cement and clothes used in Uganda are imported, which means the expensive dollar could have pushed up their prices locally.

Emmanuel Tumusiime-Mutebile, the governor of Bank of Uganda, told journalists at the beginning of this year that a weak shilling remained the biggest risk to medium-term inflation outlook.

However, there was a decline in prices of kerosene, petrol, diesel and charcoal. This was mainly driven by the low global oil prices – at $55 a barrel. Prices for food, which includes food crops and processed foods, went up during the month.

The increase in food prices was mainly as a result of the drought, which drove up prices of matooke, sweet potatoes, Irish potatoes, passion fruits, water-melon, bitter tomatoes, and green pepper, among others. Food is the biggest component of the consumer price index, which measures inflation.

Meanwhile, the shilling continued to struggle against the dollar, hitting the highs of Shs 3,000, once again for the second time this year. At the close of trading on Thursday, Bank of Uganda quoted the local currency at Shs 2,9993,009.

Last Thursday’s grissly attack on the Kenyan university in Garissa by the Al-Shabab terrorists, which claimed almost 150 lives, is likely to have far reaching effects on the region as a whole, experts say.

The security risk, which could be spread over the region, could affect dollar inflows. The US mission in Uganda has already issued a terror alert of an impending attack in Uganda.

Source : The Observer


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