Uganda's inflation doubles in 2008 as fuel crisis hits

By Ronald Ssekandi

KAMPALA, Jan. 1 (Chinese media) -- Uganda's average annual inflation in 2008 more than doubled to 12 percent from 6.1 percent recorded in 2007, shows a Uganda Bureau of Statistics report.

According to the report released by Bureau of Statistics on Wednesday, the rise was mainly due to sharp increases in the price of food, household goods, rent, fuel and utilities.

This is the highest annual inflation rate since 2000 when the current Consumer Price Index began. It is also far above the government's 5 percent target.

Food prices, which account for 27.2 percent of the Consumer Price Index which measures inflation, were 20 percent higher in 2008 than in the previous year.

The household and personal goods category was 16 percent higher and the rent, fuel and utilities category showed a 10 percent increase compared to 2007.

General inflation in 2008 was triggered by higher fuel prices and shortages, a result of the post-election violence in Kenya at the beginning of the year.

Inflation peaked at 15.8 percent in August 2008, the highest it has been since the current inflation trend started in July 2005.

Uganda Bureau of Statistics attributed the high fuel prices to the depreciating shilling and Kenya's restriction on vehicle fuel loads.

"The demand for food supplies in southern Sudan also had an impact on food prices in Uganda. This has been a unique year. Prices have been going up throughout the year," UBOS principal statistician Vincent Mubiru was quoted by the state-owned New Vision daily on Thursday as saying.

The Uganda shilling lost about 15 percent of its value in 2008,falling to about 1,950 shillings a dollar from 1,705 shillings in December 2007, according to the Bank of Uganda statistics.

However, inflation fell back marginally to 14.2 percent in the year to December, compared to 14.6 percent in November due to lower food prices.

"Prices for food went down in most centers, with significant contributions coming from matoke, onions, pineapples, beans and fish," said Mubiru.

He, however, explained that food prices continued to remain high compared to last year due to "low supplies as a result of seasonal factors, increased transport costs in addition to continued high demand for food locally and from neighboring countries."

Underlying inflation, which excludes food, fuel, electricity and metered water, was down to 12.6 percent from 12.8 percent in the year to November.

The price of some commodities has gone up by more than 100 percent. The price of tangerine rose by 128 percent, salt 70 percent, millet flour 56 percent, cooking oil 54 percent, sweet potatoes 35 percent, malwa 39 percent, tomatoes 32 percent, beans 30 percent, meat and poultry 32 percent.

As a result, Mubiri noted that consumers had resorted to inferior goods and buying less in quantities.

"Consumers are using their savings to buy food supplies and other essential goods. For example, in the case of maize flour, a family has to chose between buying less quantity of super posho or buying cheaper and inferior posho," added Mubiri.

According to the statistics, roofing nails went up by 107 percent, as cement rise by 18 percent, iron sheets 25 percent and mattresses 37 percent through out the year.