Uganda, Kenya Hit By Rising Cost of Living

Kampala — Uganda and Kenya were hit by high cost of living for the month ended April, according to data released by the two countries' bureaus of statistics.

Inflation for the month ended April, respectively moved northwards with Kenya recording the highest.

The movements were on account of the effects of severe weather and high fuel prices. This meant that households and businesses spent more than what they spent in March on the same quantity of fuel.

Uganda's overall month-on-month inflation rose to 3.5 per cent in April from 3 per cent in March while Kenya saw the highest cost of living in 19 months as its inflation jumped to 6.58 per cent from 4.35 per cent in the same period last year.

According to the Uganda Bureau of Statistics (Ubos), the increase in the cost of living during April was a result of rising food and fuel prices with fruits and vegetables being the hardest hit. However, the 3.5 per cent remains below the Central Bank's target of 5 per cent.

In its monthly monetary policy review, Bank of Uganda said risks to the inflationary pressures included uncertain weather conditions, strengthening of the domestic market for goods and services and the volatile exchange rate.

The movements negatively impact the cost of living, cost of doing business and borrowing money from banks.

In Kenya, inflation was triggered by high food and fuel prices according to data from the Kenya National Bureau of Statistics.

Analysts at the Africa-focused financial advisory firm StratLink said the adverse weather conditions experienced in the country pose a risk to the inflation prospects.

"Rainfall patterns between October last year and now indicate the prevalence of moderate to severely dry conditions over much of the Greater Horn of Africa," said an April market report published by StratLink.

In April 2019, the report also reported that there was a high likelihood of seeing drier than average conditions over much of Uganda.

"The prevailing weather is likely to lead to higher food prices and upward pressure on inflation," the report said.

The report highlights the Bank of Uganda fears, which has previously indicated that inflationary pressures had increased due to uncertain weather conditions, strengthening of the domestic market for goods and services and the volatile exchange rate.

The same factors, key among them dry weather conditions, according to StratLink, have exacerbated Kenya's inflationary pressures.

Strained food supplies and prices

The dry spell has already strained food supplies and prices in some parts of Kenya.

The average overall inflation for Kenya, Tanzania, Uganda and Rwanda during the three months to March 2019 stood at 2.9 per cent compared with 2.93 per cent in the same period last year.

The last time Kenya's overall month-on-month inflation rose beyond 6 per cent was in September 2017 when the growth in the general level of prices of goods and services in the country stood at 7.06 per cent.

Kenya National Bureau of Statistics attributed the spike to an increase in pump fuel prices and drought conditions that prevailed for the better part of April, causing an upsurge in the costs of some foodstuffs.

Fuel prices across EAC

In Uganda, prices of fuel have since the beginning of the year increased from $1.024 to $1.053 for diesel, and $1.104 to $1.133 for petrol over the same period.

In Tanzania, the price of diesel increased from $0.9 in early March to $. 0.948 in mid-April, while that of petrol rose from $0.908 to $0.929 during the same period.

In its latest review mid-April, Kenya's Energy Regulatory Commission increased the prices of petrol and diesel by an average of $0.05 after the prices of crude at the international market rose to $68.60.

With prices now hovering at $74 per barrel, a further increase in fuel prices is expected in the mid May review.

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