January Inflation Edges Up Slightly Due To Food Prices

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In short
Uganda experienced a 6.9percent rise in prices in January 2014 due to food price pressures, figures from the Uganda Bureau of Statistics (UBOS) released today have revealed. Food prices rose by 11.1percent compared to 9.2percent recorded in December 2013. Dr Chris Mukiza, Director Macroeconomics at UBOS, said this was because of reduced supplies in the market compared to what it was in December 2013.

Uganda experienced a 6.9percent rise in prices in January 2014 due to food price pressures, figures from the Uganda Bureau of Statistics (UBOS) released today have revealed.
 
Food prices rose by 11.1percent compared to 9.2percent recorded in December 2013. Dr Chris Mukiza, Director Macroeconomics at UBOS, said this was because of reduced supplies in the market compared to what it was in December 2013.
 
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Dr Mukiza pointed out that prices of potatoes, fresh cassava, oranges, cabbages, tomatoes, green paper, chicken and groundnuts had gone up in most districts around the country. In the same period, the figures also indicate that there was a rise in transport and communication charges due to the festive season. Education costs also rose as the new school term started in some areas. However, there was slowed increase in core inflation –excluding fuel and food - which dropped to 4.6percent in January 2014, from 5.7percent in December 2013. Dr Mukiza explains the decline in core inflation.
 
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Bank of Uganda (BOU) projections are that core inflation will be on an average of 5percent in 2014. Additionally, the bank had also projected that demand would pick up, leading to a rise in inflation; however it has remained largely subdued. On Tuesday, BOU will issue the benchmark lending rate for the month of February 2013. Stephen Kaboyo from Alpha Capital Partners projects says BoU is likely to maintain the soft-touch approach when it comes to setting a new lending rate.
 
Kaboyo says BOU will have to balance its outlook on inflation against the growth objective.