Uganda’s January Inflation Rises to 2.8 Percent Due to Service Charges

Uganda experienced an increase in inflation to 2.8 percent in January, breaking a reducing cycle that lasted for about 10 months. The rise from 2.6 percent in December is attributed to a surge in service charges, according to the Uganda Bureau of Statistics (Ubos).

Core inflation, excluding volatile items like energy, fuel, and metered water, also increased to 2.4 percent from 2.3 percent in January. Services inflation, a contributing factor, rose to 3.9 percent from 3.7 percent in December.

Alizike Kaudha Lubega, the Director of Macroeconomic Statistics at Ubos, highlighted that the spike in services inflation was driven by increases in passenger transport by taxi and hired car inflation, surging from 2.1 percent to 5.6 percent. Domestic flight charges increased by 2.3 percent, while church wedding fees rose significantly by 30.7 percent.

Ubos reported stable inflation in other goods at 1.3 percent. Food crops inflation increased to 2.6 percent from 2.5 percent, influenced by rising prices of vegetables, tubers, plantains, and pulse inflation, which surged from 1.4 percent to 2.2 percent. Cooking bananas, green cabbage, and green pepper prices experienced notable increases.

The changes in prices are attributed to seasonal factors, resulting in reduced market supply for certain products. Energy, Fuel, and Utilities inflation rose to 7.4 percent from 6.4 percent, driven by a 4.4 percent increase in petrol prices in January, compared to 0.6 percent in December. Firewood prices rose by 9.4 percent, while diesel decreased to -6.6 percent from -9.1 percent.

Despite the increase, the current inflation rate is considerably lower than the 10.4 percent recorded in January 2023. Businesses and consumers are affected by inflation, impacting demand for goods and services.