August inflation hits 16%
Aug 31, 2008
THE August inflation rate has hit a record high of 15.6% from 13.8% in July, the Uganda Bureau of Statistics (UBOS) has reported.
By Alice Kiingi
THE August inflation rate has hit a record high of 15.6% from 13.8% in July, the Uganda Bureau of Statistics (UBOS) has reported.
Vincent Nsubuga Musoke, the UBOS principal statistician, said the 15.6% was due to high fuel prices and increased regional demand for food, adding that it was the highest in 14 years.
“The main driver was food inflation that increased by 33.6% and has a 27.2% weight in the index, which is the largest. This is the highest rate recorded since June 1994, when it was 16.1%,†Nsubuga said.
“High oil prices increased transportation costs. This affected the transfer of imported raw materials, manufactured goods and agricultural produce to the market,†he said.
“There is high demand for agricultural products from neighbouring countries. Some parts of Kenya are experiencing drought, yet they are the largest importers of Ugandan maize. Southern Sudan and Rwanda import beans, fish, cattle and chicken from Uganda.â€
“There is also imported inflation from Kenya, India, China and South Africa. Those countries are already experiencing inflation, yet we get raw materials like soap, foam and soda for industrial production plus manufactured goods from them,†Nsubuga said at Statistics House in Kampala.
“The central bank has no monetary policy tool to control consumer headline inflation because it has significant factors that push up prices. Agriculturalists should increase production to satisfy the domestic and foreign markets. Manufacturers should also do the same in order to take advantage of the regional market and avoid imported inflation,†Juma Walusimbi, the central bank’s spokesman, said.
The annual core inflation rate, which excludes food, electricity and metered water, also increased to 13.4% from 12.9%in July.
Walusimbi said the Bank of Uganda has the mandate to control annual core inflation by selling Treasury bills, bonds and Repurchase Agreements to control money supply.
“We are maintaining a tight stance, while controlling annual core inflation to change the public’s expectations on soaring inflation,†he said.
Nsubuga said: “Although domestic fuel prices are gradually dropping, that is not passed on to the consumer. Transport fares will remain high for some time because prices of goods and services are still high.â€
He said prices were likely to remain high because there is no production in the planting season.
Ronald Ssombwe, the UBOS senior statistician, said the August headline inflation rose to 1.2% from 1% in July.
“Monthly food prices went up in most centres with significant contributions coming from matooke, sweet potatoes, cassava and Irish potatoes,†he said.
Prices of fresh vegetables and fruits dropped in most centres because it is their harvesting season.
“Gulu, Masaka, Kampala High Income and Mbarara had the highest increases in food prices,†Ssombwe noted. Prices of petrol, diesel, paraffin and charcoal increased in most centres.
THE August inflation rate has hit a record high of 15.6% from 13.8% in July, the Uganda Bureau of Statistics (UBOS) has reported.
Vincent Nsubuga Musoke, the UBOS principal statistician, said the 15.6% was due to high fuel prices and increased regional demand for food, adding that it was the highest in 14 years.
“The main driver was food inflation that increased by 33.6% and has a 27.2% weight in the index, which is the largest. This is the highest rate recorded since June 1994, when it was 16.1%,†Nsubuga said.
“High oil prices increased transportation costs. This affected the transfer of imported raw materials, manufactured goods and agricultural produce to the market,†he said.
“There is high demand for agricultural products from neighbouring countries. Some parts of Kenya are experiencing drought, yet they are the largest importers of Ugandan maize. Southern Sudan and Rwanda import beans, fish, cattle and chicken from Uganda.â€
“There is also imported inflation from Kenya, India, China and South Africa. Those countries are already experiencing inflation, yet we get raw materials like soap, foam and soda for industrial production plus manufactured goods from them,†Nsubuga said at Statistics House in Kampala.
“The central bank has no monetary policy tool to control consumer headline inflation because it has significant factors that push up prices. Agriculturalists should increase production to satisfy the domestic and foreign markets. Manufacturers should also do the same in order to take advantage of the regional market and avoid imported inflation,†Juma Walusimbi, the central bank’s spokesman, said.
The annual core inflation rate, which excludes food, electricity and metered water, also increased to 13.4% from 12.9%in July.
Walusimbi said the Bank of Uganda has the mandate to control annual core inflation by selling Treasury bills, bonds and Repurchase Agreements to control money supply.
“We are maintaining a tight stance, while controlling annual core inflation to change the public’s expectations on soaring inflation,†he said.
Nsubuga said: “Although domestic fuel prices are gradually dropping, that is not passed on to the consumer. Transport fares will remain high for some time because prices of goods and services are still high.â€
He said prices were likely to remain high because there is no production in the planting season.
Ronald Ssombwe, the UBOS senior statistician, said the August headline inflation rose to 1.2% from 1% in July.
“Monthly food prices went up in most centres with significant contributions coming from matooke, sweet potatoes, cassava and Irish potatoes,†he said.
Prices of fresh vegetables and fruits dropped in most centres because it is their harvesting season.
“Gulu, Masaka, Kampala High Income and Mbarara had the highest increases in food prices,†Ssombwe noted. Prices of petrol, diesel, paraffin and charcoal increased in most centres.