“Uganda’s July Inflation Eases to 3.9%: Food Prices Decline
According to a report released by the Uganda Bureau of Statistics (UBOS), there has been an actual drop in the prices of some items since March 2023. The items that have registered a drop in prices include cassava, Irish potatoes, matoke, maize flour, fuel and cooking oil.
The drop in prices is attributed to the increase in production and demand for food items.
Aliziki Khauda Lubega, the Director of Economic Statistics at UBOS, highlighted the impact of production and demand levels on price changes. She mentioned that the price of a bunch of matoke, for instance, had significantly reduced from its previously high levels in March and February.
“A bunch of matoke. How much money were you buying a bunch of matooke in March? All of you know that a bunch of matooke in March, Feb, was way too high. But currently, the bunch of matoke actually has gone down. So when we are doing these measurements, we are also trying to ask. Production levels, when they increase, we register those changes according to production available, the demand for it.“ she says
Core inflation, which excludes food and energy prices, was 4.8% in June, down from 5.6% in May, food inflation was 11% in June, down from 13.5% in May and Energy inflation was -2.6% in June, down from -0.3% in May.
The main factors that have contributed to inflation in Uganda in 2023 include, increase in global food prices, which has been driven by factors such as the war in Ukraine and weather shocks, depreciation of the Ugandan shilling, which has made imported goods more expensive and the increase in fuel prices, which has also been driven by the war in Ukraine.
On the other hand, the fall in inflation can bring some relief for borrowers in the country. Inflation plays a crucial role in influencing borrowing rates. When inflation is high, lending institutions often raise interest rates to protect their returns from being eroded by rising prices. Conversely, a decrease in inflation allows borrowing rates to be more favorable, making it easier for individuals and businesses to access credit and loans.
Overall, the report from UBOS indicates that Uganda experienced a drop in prices for certain items in 2023, particularly in the food sector. This decline in food inflation can alleviate some financial burden for consumers.
However, it is important to note that the impact of these price changes may vary depending on an individual’s income and the persistence of other fixed costs. Additionally, the fall in inflation is likely to benefit borrowers, as it could lead to more favorable borrowing rates and increased access to credit in the country.
Comments are closed.