Alice Kiingi
13 January 2008
Kampala — LAST year's inflation rate of 6% was the lowest in three years, a Uganda Bureau of Statistics (UBOS) analysis has shown.
"Last year recorded the lowest inflation rate in the past three years compared to 8.5% in 2005 and 7.2% in 2006," Vincent Musoke Nsubuga, the UBOS principle statistician, said.
The decline from 7.2% to 6% from January to December is largely attributed to a large supply of most staple foods, fresh vegetables at lower prices and sugar in most trading centres compared to 2006," Musoke said during the release of the January Consumer Price Index at Statistics House in Kampala recently.
He said food supply played a major role in determining
the inflation levels in 2007 because of its big weight, which is 27.2% in the index.
Ronald Ssombwe, the UBOS senior statistician said: "The index may drop in January due to low demand after the festive season."
However, he said if the post-election crisis in Kenya persists, coupled with the current fuel shortage, the rate would rise.
Fuel shortage has a big impact on commodity prices and the transport sector.
Ssombwe said some goods and services traded across the border were more than 45% of the weight in the index, which affected the prices of goods and services during the previous years.
Tradable goods and services are consumed locally and exported. These include fish, clothing, dry beans, rice and groundnuts.
Non-tradable goods and services are not exported. These include staple foods, local brew (malwa,waragi) and firewood.
"From the above factors, Uganda mainly experienced a cost push type of inflation during 2007," a source said:
Annual core inflation, which excludes food crops, fuel, metered water and electricity from the fixed basket of goods and services, dropped to 6.6% in December from 6.7% in November. In 2006, it stood at 1.3% in December from 0.6% in November.
"The drop was on account of prices of goods and services increasing at a reduced rate in December 2007 at +1.31% compared to +1.41%in December 2006, indicating increases in both months. This led to a reduction in annual core inflation," Musoke explained.
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