Communication taxes and old car ban push up August inflation

The Uganda Bureau of Statistics said Friday that the consumer prices index 12-month rate rose for the third straight month in August, mainly because of rising prices for services, particularly communication and transport.

Inflation, which is the rate at which the prices of goods and services bought by households rise or fall, rose to 3.8% in the year ending August, up from 3.1% in July. Ubos said the rise was due to an increase in annual core inflation to 3.5% from the 2.5% recorded for July.

Communication and transport inflation had the largest upward effect on core inflation. The annual inflation for communication increased by 12% versus 5.4% in July, driven by telephone and telefax services whose prices rose 16.3% in August compared to 7.5% the previous month. This is a result of taxes on social media and mobile money taxes that went into effect in July.

Transport inflation increased to 15.2% from 12.1% in July, due to a rise in the prices of purchasing vehicles and transport services. The increase in vehicle prices is also a result of laws announced for this financial year, specifically the ban on importing cars older than 15 years that goes into effect in September. The ban has seen car dealers increase prices of the cars targeted by the ban.

The annual inflation of food crops and related items in August fell by 1.2%, a lower rate than July’s 2.0% – indicating that prices of food crops increased. Ubos says this was because of a rise in the prices of fruits and vegetables.

Energy, fuel, and utilities was the only category to register a decline as inflation was registered at 14.1%, lower than the 16.0% registered in July. The contributors to the decline include solid fuels whose annual inflation of 23.4% was lower than the 30.2% recorded for the previous month.

The one-month inflation rate was 0.9%, up from the 0.4% recorded in July. The largest upward contribution was the prices of food crops and related items which rose by 1.8%, up from a 7.1% fall in July due to an increase in vegetable prices. Monthly core inflation was 1.0% in August, down from 1.4% in July.

Consumer inflation rises for second straight month in July