The drop was attributed to a decrease in prices of food crops
Uganda's overall annual inflation rate has dropped to 5.7% in July 2017 from 6.4% recorded in June.
The statistics were released at the Uganda Bureau of Statistics (UBOS) offices in Kampala on Monday.
Vincent Nsubuga, UBOS principal statistician attributed the drop to decrease in prices of food crops to 12.9% from 18.1% especially prices of fruits and vegetables to 24.2% from 32.4% and 4.9% from 9.6% respectively.
At the same time, annual core inflation rate which excludes out food, fuel, metered and electricity prices dropped below the Central Bank's target to 4.5% in July from 4.9% that was recorded in June 2017.
Nsubuga noted that the decrease in core inflation was due to drop in prices of other goods such as processed foods, clothing and footwear.
However, service inflation which includes prices of hair dressing, education, rent, health, financial and legal services, hotels and restaurants increased up to 4.0% in July 2017 from 3.9%.
On the other hand, energy, fuel and utilities increased to 7.8% in Jul 2017 from 5.7% that was recorded in June 2017.
Month-on-month, July inflation declined by 0.5% from a 0.65 drop recorded in June 2017.
Whereas Kenya's annual inflation rate stands at 9.21% in June 2017 from 11.7% recorded in May, Tanzania's year-on-year, inflation was recorded at 5.4% in June 2017 from 6.1% recorded in May.
Rwanda's annual headline inflation was recorded at 9.4% in June of 2017 from 11.7% in May.