Little Change in CBR as Inflation Falls by 0.6%

2720 Views Kampala, Uganda

In short
There was a marginally small fall in inflation from 18.6 percent in May to just 18.0 percent in June, according to the latest figures from the Uganda Bureau of Statistics (UBOS). In its report for June, UBOS also announced that the economy grew by 2.4 percent in the last quarter of the just ended financial year 20111/12.

There was a marginally small fall in inflation from 18.6 percent in May to just 18.0 percent in June, according to the latest figures from the Uganda Bureau of Statistics (UBOS).

In its report for June, UBOS also announced that the economy grew by 2.4 percent in the last quarter of the just ended financial year 20111/12.

According to Arthur Ntiro of brokerage firm African Alliance, the slight fall in inflation has implications on the Central Bank Rate (CBR), the monetary policy the central bank is using in fighting high inflation.

CBR is the rate at which the central bank lends to commercial banks for onward lending to their clients. A high CBR means high interest rates charged by banks on their clients.

The Governor of Bank of Uganda Emmanuel Tumusiime Mutebile is announcing the CBR for July today. With a slight inflationary drop there may be no change in the CBR, suggesting that bank rates will continue to remain high.

In June the Bank of Uganda maintained the CBR at 20 percent. A significant fall in inflation is usually expected to lead to a drop in the CBR, but this may not be the case with a mere 0.6 percentage drop.

If the fall is small, the CBR may not drop meaning commercial banks will maintain a high rate for their customers. Bank of Uganda uses the UBOS monthly reports to determine the CBR.

According to UBOS, the small fall in inflation was due to, among others, fall in food prices especially for matooke, Irish potatoes, green vegetables, beans, rice, chicken and milk.

UBOS also confirmed that the economy grew by 3.2 percent in the financial year 2011/12. But Vincent Musoke, the principal statistician for macro-economics, said the actual figures will be released in October when all factors have been considered.

 

About the author

David Rupiny
In his own words, David Rupiny says, "I am literally a self-trained journalist with over 12 years of experience. Add the formative, student days then I can trace my journalism roots to 1988 when as a fresher in Ordinary Level I used to report for The Giraffe News at St Aloysius College Nyapea in northern Uganda.


In addition to URN for which I have worked for five years now, I have had stints at Radio Paidha, Radio Pacis, Nile FM and KFM. I have also contributed stories for The Crusader, The New Vision and The Monitor. I have also been a contributor for international news organisations like the BBC and Institute for War and Peace Reporting. I am also a local stringer for Radio Netherlands Worldwide.


I am also a media entrepreneur. I founded The West Niler newspaper and now runs Rainbow Media Corporation (Rainbow Radio 88.2 FM in Nebbi). My areas of interest are conflict and peacebuilding, business, climate change, health and children and young people, among others."