Inflation slows down for second straight month in October on lower food and energy prices

Uganda’s annual inflation rate, measured by the consumer price index, continued falling in October reflecting a slowdown in the prices of food and energy items, according to figures from the Uganda Bureau of Statistics.

The 12-month growth rate of the consumer prices index, which measures how much the retail price of a basket of goods and services rise over one year, dropped to 3.0% in October from 3.7% the previous month.

One of the main downward drivers to the change in the annual inflation rate was a fall of 3.4% in the 12-months food crops and related items inflation rate, compared to a decline of 2.2 % in September. You would have to go back to May 2016, when the annual food crops and inflation rate was -5.7%, to find a lower rate. The rate’s decline in October was due to annual fruits inflation falling 9.1% compared to a fall of 4.6% in September.

The core inflation rate, which excludes highly volatile food and energy items and is considered to be a more accurate indicator of underlying inflation trends, also fell for the first time in four months. The 12-month growth rate of core inflation was 3.5% in October, down from 3.9% in September.

The core rate slowed down because of a decline in the annual other goods inflation rate to 2.9% from 3.4% in the 12 months ended September 2018. In particular, a fall in the 12-month growth rates of maize flour inflation, sugar inflation, and services inflation was responsible for its decline.

The energy, fuels, and utilities inflation rate continued its four-month downward trend, falling to 6.9% in the 12 months ending October the lowest its been since June 2017 compared to the 10.1% rate recorded in September. Its decline was largely attributed to the solid fuels inflation rate which reduced to 3.1% from 11.7% in September. The annual inflation rate for charcoal was was 2.7% from 12.0% while kerosene’s was 22.5% versus 23.7% the previous month.

The monthly inflation rate for October 2018 was -0.2%, down from the 0.8% rise recorded for September. The food crops and related items inflation rate was recorded at -1.1%, down from 3.6% the previous month. The core inflation and energy, fuel, and utilities rates also fell by 0.2% and 1.2% respectively, down from rises of of 0.5% and 0.1% respectively in September.

Related: Consumer prices slow slightly in September but core inflation hits 12-month high