October inflation down to 3%

Uganda's year-on-year inflation dropped to 3% in October 2018 compared to 3.7% that was recorded during September. 

The decline was attributed to annual food crops that decelerated to minus 3.4% compared to minus 2.2% recorded in September 2018. 

The consumer price index (CPI) report released by the Uganda bureau of Statistics (UBOS) further indicated that the deceleration was due to decline in prices of fruits and vegetables. 

Inflation rate measures a broad rise or fall in prices that consumers pay for a standard basket of goods over a period of time. 

"Food crops decelerated further to minus 3.4% compared to minus 2.2% recorded in September 2018. The deceleration is due to annual fruits that registered minus 9.1% in October 2018 compared to minus 4.6%," Chris Mukiza the UBOS director macroeconomic statistics said.

He added that annual vegetable inflation registered minus 2.3% in October 2018 compared to minus 3.4% recorded for the period under review. 

Commodity price reductions were recorded in; vegetables, charcoal, maize flour, beef, chicken, fish (tilapia), offals, milk, timber and millet bread. This he noted that was due to seasonal rains that enabled consumers purchase the above commodities at a less price. 

On average, Uganda's inflation stood at 174.54 in October 2018 compared to 175.16 that was recorded in September 2018.

Regionally, Kenya's annual inflation rate fell to 5.53% in October of 2018 from 5.7% in September and Rwanda's consumer prices fell to -1.1% percent year-on-year in September of 2018, following a 0.6% gain in the July. 

Tanzania's inflation rose to 3.4% in September 2018 from the 3.3% recorded in July. 

In addition, annual Energy, fuel and utilities (EFU) declined to 6.9% in October 2018 from the 10.1% recorded during the period under review. 

Core inflation which excludes food, fuel, electricity and metered water which are volatile to price changes, declined to 3.5% in October 2018 from 3.9% recorded in September 2018. 

Furthermore, month-on-month inflation too dropped and was recorded at -0.4% in October 2018 from the 0.8% rise recorded in September 2018.

"The marginal drop of inflation taking it to the lowest print we have seen since June, is attributable to decrease in prices of food stuffs that make a significant component of the basket of goods. This decline has outweighed the decrease of other goods," noted Stephen Kaboyo a financial analyst.

He says that, low inflation is beneficial to the economy because it allows consumers to buy more goods and acquire services.

Kaboyo added that low inflation makes borrowing more appealing since interest rates are usually low in periods of low inflation.