KAMPALA, Dec 16 — The Ugandan shilling may depreciate further and food prices increase more than expected if farmers post poor agricultural harvests, warns the Bank of Uganda (BOU).
BOU Governor Emmanuel Tumusiime Mutebile said here Monday that there were upside risks to inflation over the medium term because of the likely increase in domestic demand.
Addressing a media briefing to issue the central bank’s Monetary Policy Statement for Deecember, he said core inflation, which excludes food crops and metered water which are volatile to price changes, was expected to be between 2,0 and 4.0 per cent over the next three months.
Core inflation was also expected to rise to about 5.0 per cent over the next 12 months and this would most likely cause increased prices for imported goods.
Although the shilling had depreciated by about 9,0 per cent against the YS dollar since January, the central bank’s Director of Research, Adam Mugume, said further depreciation had been contained by low prices of imported goods.
Last week, the shilling was quoted at 2765/2775 against the greenback compared with 2760/2770 early in the week.
SOURCE: NEW VISION