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Uganda’s core inflation drops to 3.3%, below the central bank’s target of 5%


Uganda’s annual inflation rate in March 2024 declined marginally to 3.3%, from 3.4% in February 2024. This remains below the Bank of Uganda’s (BoU) aim of less than 5%. The move comes after the BoU kept the central bank rate (CBR) at 9.5% in February 2024 in an effort to control inflation.

This reduction is mostly the result of a consistent core inflation rate of 3.4% in both periods. The main driver of this core inflation was an increase in service costs, which rose to 5.5% for the fiscal year ending March 2024, up from 5.4% in February 2024.

The rise in service pricing was attributed to greater passenger transport costs, which increased to 2.6% in March 2024 from 1.2% in February. Financial services also experienced a large increase, reaching 13.4% in March 2024 from 0% in February 2024. This significant increase in financial service inflation requires more scrutiny, and it is unclear whether the government has taken any special actions in this regard.

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Inflation for other goods fell to 1.6% for the fiscal year ending March 2024, down from 1.8% in February. The slowdown was driven by relatively unchanged pricing for most items, with the exception of dried kapenta (silver cyprinid), popular local gin (waragi), and goat meat, which saw price hikes in March 2024 over February 2024.

According to a report from the Uganda Bureau of Statistics, meat prices grew by 14.0 percent in March 2024, up from 9.3 percent in February.

Energy Inflation
Uganda’s annual energy and fuel inflation fell to 7.6% in March 2024, from 8.0% in February 2024. This mitigation was due to lower price rises for charcoal, firewood, and gasoline.

At the same time, the drop in energy and fuel prices signals that the government may intervene to keep fuel prices stable or promote alternative energy sources.

Techrectory with Agency Report.

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