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Reduction in cost of fuel sees slow down in commodity, service prices
Government says it expected fuel prices to further reduce by December. Photo / File
What you need to know:
- Prices of petrol and diesel dropped to 2.2 percent from 6.7 percent and - 2.6 percent from 0.8 percent in August, respectively
A drop in goods and services, especially fuel and related products, saw a decline in inflation to 3 percent in September, according to the Uganda Bureau of Statistics (Ubos).
The decline means that inflation has reduced by 0.5 percent from 3.5 percent in August, and has seen consumers spend less on many goods and services compared to three months ago.
Inflation had earlier in the year threatened to increase due to the increasing cost of fuel and related services. However, while presenting the consumer price index in Kampala, Mr Edgar Niyimpa, the Ubos principal price statistician, said inflationary pressures had decelerated due to a drop in services inflation to 5.8 percent from 6.2 percent, because of a decline in passenger transport fares to 4.1 percent from 6.9 percent.
He also noted that prices of rice, round onions, cabbages, and sweet potatoes dropped in addition to more price declines in housing, water, gas, and other fuel. Energy fuel and utilities inflation decreased to 4.1 percent from 4.7 percent, mainly due to liquid energy fuels inflation, which dropped to - 2 percent from 3.8 percent in August.
The drop was largely driven by a decrease in prices of petrol and diesel, which dropped to 2.2 percent from 6.7 percent and - 2.6 percent from 0.8 percent in August, respectively.
However, solid fuel inflation rose to 14.3 percent from 9.4 percent driven by charcoal and firewood, while water charges rose to 4.4 percent from 2.8 percent.
Dr Corti Paul Lakuma, a senior research fellow at the Economic Policy Research Centre, said that the overall drop in inflation suggests an enhancement in household purchasing power and, more importantly, offers room for reducing the Central Bank Rate to support private-sector credit.
Kampala high-income returned the highest inflation of 4 percent, followed by Mbarara at 3.9 percent due to a rise in housing, water, electricity, gas and other fuels inflation to 9.9 percent.
However, Kampala low-income registered the lowest inflation of 1.6 percent due to a reduction in annual food and non-alcoholic beverage inflation to - 4.3 percent.
In Masaka, inflation stood at 3.5 percent from 3.9 percent, while in Arua it dropped to 3.1 percent from 3.2 percent. In Gulu, it stood at 2.2 percent, Jinja 2.8 percent, while in Fort Portal and Kampala middle income, it dropped to 2.7 percent and 1.8 percent, respectively.
