Inflation Slows on Declining Prices in 2014 - UBOS

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In short
During the year, costs of beverages, tobacco, rent, fuel, electricity, transport, communication, education, health and entertainment all dropped. On the processed food front, Sugar prices were depressed for most of the year as the factories were producing over and above their targets.

The Uganda Bureau of Statistics (UBOS) has reported a slow pace in increase of commodity prices in 2014. At a media briefing today UBOS figures revealed that price changes in 2014 were 4.8% down from 5.5% in 2013. This change was mainly attributed to the falling of core inflation, mainly in education and health sectors.

"The biggest contributor to the change was in the core inflation largely due to the monetary policy by Bank of Uganda," Dr. Chris Mukiza, the Director Macro-economic statistics at Ubos said.

The monetary policy by BOU pegs the key lending rate to inflationary targets. During the year, BOU maintained a tight policy by keeping the benchmark rate at 11.5%. According to Dr Mukiza, the approach by BOU continues to subdue demand, hence the lower inflationary pressures.

During the year, costs of beverages, tobacco, rent, fuel, electricity, transport, communication, education, health and entertainment all dropped.

On the processed food front, Sugar prices were depressed for most of the year as the factories were producing over and above their targets. Sugar production was up 17.6percent to 193,000 tons in the first six months of 2014. Sugar costs an average of Ugx 2400 in 2014, compared to Ugx 2700 in 2013.

Vincent Nsubuga, the Principal Statistician at UBOS confirmed the changes in the price of sugar.
 
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During the year, food prices were in double digits at least until June 2014 when they started dropping.

By August 2014, food prices were reducing at various markets and this continued till the end of the year.

In 2014, the highest inflation recorded was in March 2014 at 7.1%, this at the time was due to food crop prices that surged on lower supplies in the market. However, since then, inflation has hit a three year low of 1.4%.  Inflation does however tend to rebound at the beginning of the year, all through to about April.