Uganda’s annual inflation rate eased to 2.8 per cent in March from 2.9 per cent in February, even as fuel and utility costs rose at their fastest pace in over a year, underscoring the continued dominance of core and food prices in the consumption basket.
The decline in headline inflation was driven by a continued slowdown in core prices, which fell to 2.9 per cent from 3 per cent in February, according to data from the Uganda Bureau of Statistics released Tuesday. Core inflation, which accounts for 84 per cent of the consumer basket, was pulled down by softer goods prices and moderate services inflation.
Core goods inflation remained subdued at 2 per cent, though the composition shifted. Maize flour prices rose 8.3 per cent year-on-year, down from 10.8 per cent in February, whilst dried fish inflation held at 8.5 per cent. Live chicken prices fell 0.3 per cent compared with a 2.1 per cent rise in February, whilst refined oil inflation eased to 2.2 per cent from 4.1 per cent.
Services inflation, which represents 38.4 per cent of the basket, slipped to 4 per cent from 4.1 per cent. The decline was led by restaurants and accommodation services, where annual inflation moderated to 3.7 per cent from 4 per cent in February.
Food crops inflation dropped to 1 per cent from 1.8 per cent in February, marking the lowest reading since February 2025, reflecting improved seasonal supply conditions. Fresh milk prices fell 4 per cent year-on-year, reversing the 3.7 per cent rise recorded in February, whilst passion fruit prices declined 4.7 per cent compared with a 7.7 per cent gain the previous month. Pineapples slipped into deflation at minus 0.7 per cent, down from 19.4 per cent growth in February.
Energy and utilities inflation rose to 4.1 per cent from 2.7 per cent in February, driven by higher biomass and fuel costs. Firewood prices surged 16.2 per cent annually compared with 10.3 per cent in February, whilst charcoal rose 8.1 per cent against 6.0 per cent previously. Petrol inflation climbed to 4.4 per cent from 3.4 per cent, whilst diesel accelerated to 3.0 per cent from 0.8 per cent.
Core and food components carry greater weight in the consumer basket, outweighing the impact of rising energy costs.
Within the COICOP classification, housing, water, electricity and fuels recorded the fastest price growth, while food and non-alcoholic beverages continued to moderate.
Month-on-month, the consumer price index rose 0.1 per cent in March, slowing from February’s 0.3 per cent increase. Core inflation was flat at 0 per cent, with core goods declining 0.1 per cent whilst services rose 0.1 per cent.
Energy, fuel and utilities recorded the sharpest monthly increase, rising 1.0 per cent compared with 0.6 per cent the previous month — the fastest pace since September 2024. Firewood prices jumped 3.5 per cent month-on-month, whilst diesel gained 2.3 per cent, charcoal 1.6 per cent, and petrol 0.8 per cent, compared with 2.1, 0.8, 0.4, and 1.4 per cent in February, respectively.
Food crops prices rose 0.3 per cent month-on-month. Tomatoes climbed 6.6 per cent, Irish potatoes gained 5.2 per cent, and sweet potatoes rose 5.5 per cent. Watermelon prices increased 12.9 per cent, up from a 2.1 per cent rise in February.
For now, easing core and food prices continue to anchor inflation below target, giving policymakers room to hold their current stance. But a sustained rise in fuel costs due to the war in the Middle East, particularly if it feeds through to transport and other core components, could narrow that space and force a reassessment of the policy path.
The Bank of Uganda has held its central bank rate at 9.75 per cent since October 2024.
