Food prices push down Ugandan inflation rate

Lower food prices drove Uganda’s year-on-year inflation rate down to 27 percent in December, data showed on on Friday, capping a year which recorded the highest average annual inflation rate since 1992.

The Uganda Bureau of Statistics said headline inflation fell two percentage points from 29 percent a month ago and the core rate of inflation – which excludes food crops, fuel, electricity and metred water — fell to 29.2 percent from 30.6 percent.

The statistics office said the average annual inflation rate this year was 18.7 percent up from 4 percent in 2010 and the highest since 1992 when it stood at 54.5 percent.

“The main inflation driver is food prices … food price inflation decreased to 34.7 percent for the year ending December 2011 from 40.3 percent registered in November 2011,” the statistics bureau said in a statement.

It said the prices of matoke, sweet potatoes, Irish potatoes, cabbages, tomatoes, carrots, beans and ground nuts had all fallen.

Month-on-month, the headline inflation rate edged down 0.1 percent in December compared to a 0.1 percent rise in November, helped by a 3.9 percent month-on-month drop in food prices.

Double-digit inflation and a weak local currency had prompted public protests earlier this year in east Africa’s third largest economy over high food and fuel prices.

But a round of increases in the central bank’s key lending rate seem to have finally put a halt on rising inflation, which also fell in November after reaching an 18-year high in October.

Uganda’s shilling has also recovered from an all-time low of 2,901 hit in late September, although it is still about 6.5 percent weaker than the dollar in the year to date.

Reuters.