Consumer prices drop in April on lower food, energy costs

Uganda’s inflation slowed in April, ending a three-month spell of rising prices, as costs of food, gas, and other fuels fell.

Consumer prices rose at an annual rate of 2.1 per cent, down from 2.7 per cent in March, according to figures from the Uganda Bureau of Statistics.

The bureau also said that it has changed the way it calculates the consumer prices index measure of inflation, changing the reference period to 2016/2017 from 2009/2010 and updating its basket of goods and services and the weights applied to items in the basket.

April’s inflation drop was driven by a fall in the prices of food and non-alcoholic beverages of 2 per cent year on year following a 0.4 per cent rise in March. The 12-month inflation rate for housing, water, electricity, gas, and other fuels also decreased by 1.5 per cent, down from a decline of 0.8 per cent the previous month.

The prices of food crops and related items decreased 1.6 per cent from a year ago, following a 0.3 per cent drop in the previous month. Energy, fuel, and utilities inflation fell 2.4 per cent.

Core inflation — which excludes the volatile categories of food and energy — climbed 2.9 per cent over the past 12 months, the slowest jump since May 2020. Core CPI in March was up 3.4 per cent from a year ago.

The slowdown in core consumer prices follows the softening in other goods inflation — 0.3 per cent over the past year from a rise of 1.3 per cent the previous month. The increase in prices of services was unchanged at 6 per cent year on year.

Transport inflation — which includes vehicle prices, costs of operating personal transport equipment, and passenger transport services — rose 19.6 per cent from 18.8 per cent in March, while health inflation was 5.5 per cent.

Month on month, consumer prices rose 0.3 per cent, the same rate recorded in March. Core prices rose 0.2 per cent over the same period, unchanged from March. Food inflation slowed to 1.9 per cent from 2.5 per cent, while inflation for energy, fuel, and utilities fell 0.3 per cent compared to March’s 0.7 per cent drop.

The CPI measures the rate at which the price levels of a fixed basket of goods and services bought by households rises or falls. The consumer prices basket is a sample of representative goods and services purchased by urban households in eight towns: Kampala (divided into high-income, middle-income, and low-income households), Jinja, Mbale, Masaka, Mbarara, Fort Portal, Gulu, and Arua.

Items in the consumer prices basket are assigned weights based on their importance in the typical household budget. Ubos said the basket and weights in the rebased index were “derived from the Uganda National Household Survey that was conducted from July 2016 to June 2017”, and reflect “significant changes in goods and services in some areas”.

The new reference date for the CPI is the 2016/2017 fiscal year. This means that the index is calculated by comparing prices in a certain period to 2016/17, when the index is given a value of 100. April’s CPI was 112.5, which indicates that Shs112.5 would buy the same amount of goods and services that Shs100 would have in 2016/17. It also represents an increase in prices of 12.5 per cent between 2016/17 and April.

On the other hand, the CPI in April 2020 was 110.19. The annual inflation rate in April, as a result, is the percentage change in the index compared with the value recorded in April 2020.