Prices for food crops and related items helped push Uganda consumer prices a notch higher in October and to their highest level in three months.
The headline inflation rate rose 2.5% year on year last month, up from 1.9% in September, the Uganda Bureau of Statistics said on Thursday. That was the quickest pace since July.
Prices of food crops and related items fell 0.9% compared to a year earlier, up from a decline of 3% the previous month, and was largely responsible for the increase in consumer prices across all items. Ubos said this was largely a result of a year on year increase in fruits inflation and vegetable inflation.
Core consumer prices, which strip out volatile food and energy prices, rose 2.6% from a year earlier in October, up from 2.5% the previous month, the first increase in four months. This was due to a rise in the annual other goods inflation rate which, in turn, was driven by an increase in inflation for meat and inflation for fish. Services inflation, on the other hand, was flat at 1.5%.
Last month, the Bank of Uganda reduced its policy rate by 1% to 9%, the first interest rate cut since February 2018, citing a benign inflation outlook in which the 12-month core consumer price index will remain below the 5% policy target until the fourth quarter of 2020. The central bank said it expects lower interest rates to increase demand and, as a result, increase economic activity.
Energy, fuel and utilities inflation rose 5.1% from a year ago — the biggest move in six months — up from 2.5% in September.
Monthly headline inflation rose 0.2% in October, down from the 0.7% increase recorded the previous month. The rise was largely driven by monthly food crops and related item inflation which increased 1% versus 0.2% in September.
Core inflation rose 0% month on month in October from 0.4% the prior month, with a small rise in services inflation offset by a drop in other goods inflation.
The monthly energy fuel and utilities inflation rate increased by 1.3% from the 1.6% rise recorded in September, mainly due to a drop in solid fuels inflation to 3.9% from the 4.6% rise recorded the previous month.