Uganda consumer price inflation moderated in January after striking its highest level in fifteen months in the previous month, lowering the probability that the Bank of Uganda will depart from its accommodative monetary policy when it sets interest rates later this month.
The annual rate on the consumer price index (CPI) fell to 3.4% in January from 3.6% in December, the second-lowest in ten months, according to the Uganda National Bureau of Statistics.
Ubos attributed the decrease in the headline inflation rate to a fall in annual clothing and footwear inflation, to 2.4% versus the 4.3% reported for the 12 months ending December 2019. In addition, the annual transport inflation rate also decreased in January, amid reductions in transport prices following the end of the festive season.
Core inflation, which removes volatile food and energy prices and is closely monitored by the central bank, was unchanged at 3% year on year, the same rate registered in the previous month. Other goods inflation was unchanged at 4.1% year on year in January, while services inflation rose to 1.5% from 1.4% in December, Ubos said.
A decrease in annual fruits inflation, driven by a fall in banana prices, was responsible for the decline in the 12-month food crops and related items inflation rate to 2.6%, down from 3.4% the previous month. An increase in food prices contributed the most to the year on year rise in inflation in December.
Energy, fuel and utilities inflation also fell to 7.7% year on year in January compared to the 8.8% recorded in December. The decline was due to falls in inflation for petrol, and diesel, leading to a fall in liquid energy fuels inflation.
The headline inflation rate declined to 0.1% in January from 0.4% the previous month, following a decline in monthly core inflation. Core inflation rose 0.1% in January, down from a rise of 0.5% in December.
Food crops and related items inflation was recorded at 0.4%, slightly lower than December’s 0.5% growth. The slight decline was driven by a reduction in the monthly fruits inflation rate.
The monthly energy, fuel and utilities inflation rate for January was registered at 0.0%, down from the 0.8% increase recorded in December. Ubos said “the stability was due to monthly solid fuels inflation that rose by 0.1%… which has been offset by a drop in monthly liquid energy fuels inflation that is registered at minus 0.6%.”