Inflation rises to 6% on fuel, charcoal

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After a declining trend since December 2015, the general rise in prices of goods and services – inflation – edged up by a higher percentage by end of June.

According to the Uganda Bureau of Statistics (Ubos), the headline inflation rose to 5.9 per cent in June, up from 5.4 per cent in May.

Mr Vincent Nsubuga, principal statistician at Ubos, told journalists at the release of the consumer price index figures in Kampala on Thursday that the changes in fuel and charcoal prices contributed to the increment.

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“In particular, charcoal prices increased by 3.3 per cent in June 2016 from an earlier drop of 0.8 per cent that was recorded in May 2016. In addition petrol and diesel prices increased by 1.6 per cent and 6.6 per cent respectively during the month of June 2016,” Mr Nsubuga explained.Fuel prices have been going upwards because of the global crude oil prices rising and the depreciation of the Shilling in June 2016.

Mr Nsubuga said charcoal prices rose as a result of reduced supply and rising demand.Food crop prices did not rise in June 2016, according to Ubos. This is attributed to the fall in prices of matooke and fruits due to increased supplies. “This is a harvesting season for many food crops and for food such as matooke, the markets are receiving more supplies,” Mr Nsubuga said.

Core inflation, which Bank of Uganda uses to determine the benchmark lending rate, dropped marginally to record an increment of 6.9 per cent in June 2016 from 7 per cent in May 2016. The Central Bank projection is that inflation will fall to about 5 per cent during the 2016/17 financial year.

Uganda Bureau of Statistics also revealed that in the financial year 2015/16, the inflation rate rose by 6.6 percent compared to 3 per cent in 2014/15. The statistics body attributed this to price increments, especially on electricity, processed food, food crops and rental items during the financial year 2015/16.

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