Inflation was flat in December, although core consumer prices, which are more closely monitored by policymakers, accelerated for the first time since February on the back of a rise in transport prices.
Figures released on Friday showed annual inflation rose 2.6 per cent in December, the same rate as in November, while the year-on-year core rate increased to 2.3 per cent from 2 per cent the previous month.
The core rate strips out volatile food and energy prices, changes in which are considered transitory, and is seen as a measure of the underlying trend in inflation. Because of this, it is the target for monetary policy by the Bank of Uganda.
The rise in core inflation was driven by services inflation, which jumped 3.7 per cent on year in December, compared with 2.8 per cent in the previous month. This was the result of a 4.3 per cent increase in the annual price of road passenger transport, compared with a fall of 4.4 per cent in the previous month. There was also an increase in air passenger fares.
Annual inflation for energy, fuels, and utilities rose to 6.4 per cent compared with 4.3 per cent in November. This was due to a 24.7 per cent increase in the price of charcoal, compared with 16.7 per cent in the previous month. Petrol prices increased by 0.6 per cent, compared with a fall of 3.9 per cent in November.
Annual inflation for food crops and related items increased at a slower rate of 2.5 per cent in December, compared with 6.4 per cent the prior month.
Monthly headline inflation increased by 0.1 per cent in December, compared with an increase of 0.2 per cent in the previous month. This was largely due to core inflation, which rose 0.5 per cent on the month, compared with 0.3 per cent in November, driven by an increase in services prices — the result of higher transport prices.
Energy, fuels, and utilities prices accelerated 0.7 per cent in December, compared with 0.4 per cent a month earlier. This followed a 7 per cent increase in the price of charcoal, compared with 3.2 per cent in November. However, prices for liquid fuels dropped by 0.7 per cent, after increasing by 1 per cent in November on the back of a fall in petrol prices.
Inflation for food crops and related items dropped by 3.4 per cent on the month, faster than November’s drop of 0.3 per cent, following falls in the prices of onions, beans, tomatoes, irish potatoes, and mangoes.
Ubos said average annual inflation for 2023 was 4.6 per cent, down from 7.2 per cent a year earlier. Core inflation averaged 4 per cent, down from 6 per cent in 2022.
