Inflation drops below Bank of Uganda target

By Leonard Kamugisha Akida,
ECONOMIC REPORT
Uganda’s inflation rate has reduced to below the Bank of Uganda initial rate of 5 percent.

This has been revealed by the Permanent Secretary also Secretary to the Treasury, Ramathan Ggoobi when he was speaking to journalists at Uganda Media Centre on Tuesday, July 18.

“Our inflation has over timed on a downward trend and it has reduced below the BoU target rate of 5 percent,” he said.

A March 2023 report by Fitch Ratings indicated that Uganda’s inflation was projected to remain above Bank of Uganda 5 percent throughout the year 2023 and to the part of 2024.

“We expect inflation to moderate to 5.5 percent in 2024,” read projections of the report.

Also, in December 2022, the BoU reported that inflation was likely to drop between 6-8 percent by the end of this year before stabilizing around 5 percent

According to Ggoobi, Uganda’s inflation has improved significantly compared to the inflation in the region. He says this has strengthened the country’s macro economic stability.

He attributed the reduction in inflation to deliberate and well coordinated fiscal and monetary policy. He added that the country’s economy has been on a steady recovery since the COVID-19 pandemic with growth estimated at 5.3 percent in the FY 2022/23 up from 4 percent last financial year.

In addition, Ggoobi boasted of the continued restrictions on monetary policy and an increase in export revenue which have enabled Ugandan shillings to gain more strength against the dollar.

“Ugandan shillings has gained strength against the dollar during the month of June with an appreciation of 0.6 percent month to month on average and moderate to 3707 per dollar from 3729 per dollar in May,” PS Ggoobi said.