Consumer prices unchanged in March but core inflation heats up

Uganda’s consumer prices were unchanged in March after increasing in each of the first two months of the year, the Uganda Bureau of Statistics said.

The annual inflation rate was 3.0%, the same increase as in February. But in a trend that will not go unnoticed at the Bank of Uganda, the rise in March’s inflation was largely due to core inflation, just like in February. Core inflation increased 4.6% in the 12 months to March, up from 3.7% in the previous month.

However, growth in the core measure of inflation — which excludes the more volatile food and energy prices, and is therefore closely watched by the central bank — was faster in March compared to February; 0.9% versus 0.3%.

Additionally, at 4.6% it is edging closer to the Bank of Uganda medium-term target of 5.0%.

The rise in core inflation was driven by higher prices for the ‘Other Goods’ category, according to the statistics bureau. Clothing and footwear prices increased by 5.5% in the year to March up from 4.5% the previous month, while prices for alcoholic beverages, tobacco and narcotics rose 2.4% versus 1.1% in February.

Service inflation declined, on the other hand, mainly because of a reduction in education prices.

Ubos said the prices of food crops and related items fell 9.9% in March compared to a year earlier, down from a decline of 4.4% registered in February. This was due to a fall in fruits inflation. The prices of vegetables recorded a rise in the month, on the other hand.

Energy, fuels, and utilities inflation rose 5.3% in the 12 months to March, down from 5.9% in February. Petrol prices increased by 6.0% in the year ending March, slower than February’s 9.8%. Also, diesel inflation slowed to 14.5% from 18.7% in February.

The one-month growth rate for consumer prices in March was 0.5%, Ubos said, up from 0.3% in February. Core inflation rose 1.0% from 0.0% in February, even as fuel and utilities prices and the prices of food crops and related items declined.