Business
Ugandan inflation nudges higher in January
Publish Date: Feb 03, 2014
Ugandan inflation nudges higher in January
Prices of food and non-alcoholic beverages rose 1 percent from the previous month.
  • mail
  • img
newvision

NAIROBI - Kenya's year-on-year inflation rate inched up to 7.21 percent in the year to January, the statistics office said on Friday, coming closer to the 7.5 percent upper threshold of the central bank's target range.

In neighbouring Uganda, headline inflation also rose, to 6.9 percent in January from 6.7 percent the month before. Core inflation fell to 4.6 percent from 5.7 percent.

The two east African economies have enjoyed relatively manageable inflation in the past two years. High commodity prices in global markets and drought at home had caused inflation to soar in 2011.

Kenya's policymakers held interest rates at 8.5 percent for their fourth straight meeting this month, citing stability in key indicators such as inflation.

Though the January inflation increase is small, it is the first since September, when it jumped to its 2013 high of 8.29 percent after a new sales tax came into force. Traders said it is unlikely to affect policy for now because the outlook for prices is still benign.

"Headline inflation remains contained, with major threats expected to escalate from May onwards due to grain imports and potential negative base effects," said Alex Muiruri, a fixed-income trader at African Alliance Investment Bank.

Prices of food and non-alcoholic beverages rose 1 percent from the previous month. Housing, water, electricity and gas prices were up 0.87 percent. Education costs rose to 3.7 percent, reflecting a seasonal adjustment at the start of the new school year.

In Uganda, traders said policymakers were likely to leave rates unchanged in February after the decline in core inflation.

"It's also worth noting that commercial banks' lending rates are still high and BOU (the central bank) is eager to bring them down and a rate hike wouldn't serve that purpose," said Benson Okwenje, a trader at Stanbic Bank Uganda.

The central bank unexpectedly trimmed its benchmark lending rate by 50 basis points to 11.5 percent in early December, citing economic growth below potential.

Annual food inflation for the year ending in January rose to 11.1 percent from 9.2 percent in December, causing the slight rise in the headline rate.

Reuters

The statements, comments, or opinions expressed through the use of New Vision Online are those of their respective authors, who are solely responsible for them, and do not necessarily represent the views held by the staff and management of New Vision Online.

New Vision Online reserves the right to moderate, publish or delete a post without warning or consultation with the author.Find out why we moderate comments. For any questions please contact digital@newvision.co.ug

  • mail
  • img
blog comments powered by Disqus
Also In This Section
More work still needed on Tororo-Pakwach railway line
Rift Valley Railways (RVR), the firm that has rail services concessionaire in Uganda and Kenya, says more work needs to be done for the Tororo-Pakwach railway to be fully operational....
Bunyoro advised to grow more coffee
Bunyoro Kitara Diocese Bishop, Nathan Kyamanywa has urged people in the sub-region to grow more coffee if they are to improve their household incomes and live better lives....
CEOs to parliament: Stop politicking and address country’s economic concerns
Chief executives of leading industries have called for a structured engagement with government especially parliament to ensure the legislature focuses on the country’s economic needs....
Museveni launches construction of Soroti fruit factory
CONSTRUCTION of a multibillion fruit processing factory based in Soroti district has been launched by President Museveni with emphasis to grow more fruits...
Finance regrets lack of support to innovators
Finance minister Maria Kiwanuka has regretted that young innovators have been left to fend for themselves many times lacking the opportunity to interface with venture capitalists and possible financiers for their brilliant ideas....
Museveni to launch Soroti Fruit Processing Factory
President Yoweri Museveni will today launch the proposed fruit-processing factory in the Eastern region, which Government expects to boost employment figures and also create a viable market for the fruits, especially mangoes and oranges of Teso farmers....
Should bride price be made optional?
Yes
No
Can't Say
follow us
subscribe to our news letter