By Aloysious Kasoma
Food prices have remained high despite a drop in inflation figures, the February 2023 Consumer Price Index (CPI) figures have shown.
According to the Uganda Bureau of Statistics (UBOS) latest figures released yesterday (February 27), the annual inflation for the year ending February 2023 has slowed down to 9.2% from 10.4% recorded in January 2023.
The annual core inflation has slowed to 7.8% from the 9.0% recorded in January 2023.
Officials attributed the high food prices to natural factors and the effects of the Covid-19 lockdown that paralyzed many economies including Uganda.
Uganda Bureau of Statistics (UBOS) Executive Director, Chris Mukiza, said that prices of essential commodities are likely to go up although at a lower rate.
“We are not saying that food prices are reducing. The prices are increasing but at a lower rate compared to recent months,” he said.
Mukiza said the country has not yet recovered from the effects of Covid-19 after two years of lockdown explaining the inflation levels the country is still grappling with.
The Director for Economics and Statistics, Alizik Lubega, explained that despite a decrease in the cost of fuel in the transport sector, the cost of transport services maintenance is still high.
“These prices have gone up on top of what has been high, there are those items which raise the cost of transport,” Lubega said.
“There is some kind of easing when you compare to the sharp increase recorded previously. We are going to reach that level. When you look at transport, you realize that the inflation has been reduced at that 5.4% compared to what we recorded in the year that ended in January or 4.9%,” she explained.
According to the February CPI annual report, essential commodities, foods and vegetables recorded a progressive inflation decline in soap, Matooke and maize flour, inflation has slowed to 53.3% from 90.8% in January 2023.
According to a recent Bank of Uganda monetary policy statement, Uganda’s economic growth is estimated to be in the range of 5.0% and 5.3% in the current financial year up from 4.7% in the previous financial year.
Reports indicate that the services sector currently accounts for 51% of Uganda’s total GDP of $45.7b.
Agriculture, forestry & fishing account for 27% and the industrial sector represents around 22% of the GDP, mostly due to manufacturing (9%) and construction (8%).
The biggest segments within services are trade & repairs (13%); education (8%); real estate (5%); and finance and insurance (4%).
The Bank of Uganda Deputy Governor Michael Atingi-Ego said that inflation which rose from 2.9% to 10.6% had greatly endangered the economy that they had to come up with various measures including increasing the Central Bank Rate (CBR) from 6.5% to 10% to control the situation.
“Other factors remaining constant, we project that in 2023, inflation will continue to be high between 8% and 10% and later in 2024 come down to about 5%. It means that the current economic conditions that have caused high inflation will take some time before they can be solved,” Atingi-Ego explained.