No sign of Ugandan inflation jump fading in October

Uganda's headline inflation rate held high at 8.1 percent in October, falling compared to a higher revised figure for September but offering little sign that last month's price spike was easing.

Analysts said the data was likely to discourage the central bank from easing interest rates next week, pointing to borrowing costs staying on hold at 12 percent for a second straight month.

The central bank said after holding fire at last week's meeting that the September spike in inflation, which in 2011 jumped to an 18-year high of 30.5 percent, was temporary. The official data on Thursday revised the September figure up to 8.4 from a previous 8.0 percent.

"I see the bank keeping the rate at 12 percent even if there's a temptation to ease borrowing costs," said Faisal Bukenya, head of market making at Barclays Uganda.

"We have seen yields in Treasury securities have been going up which suggests the central bank still favours a tight policy stance."

Core inflation edged lower to 7.2 percent during the period, after the previous month's rate was revised to 7.4 percent from 6.9 percent, the official data showed on Thursday.

The statistics office said the revisions in the September data were caused by a review of costs in the education sector. It attributed the slowdown in the headline rate to a decrease in food inflation.

"The decline in food inflation was driven by a reduction in prices of most fresh vegetables, fruits, dried beans and milk in most centers," it said in a statement. Reuters