In the 12 months leading up to January 2024, Uganda witnessed a modest increase in its annual inflation rate, reaching 2.8%, up from the 2.6% recorded in December 2023. This uptick is primarily attributed to the Annual Core Inflation, which experienced a 2.4% surge compared to the previous year.

Annual services inflation leads the way

The key driver behind the Annual Core Inflation surge was the significant increase in Annual Services Inflation, reaching 3.9% in January 2024 compared to 3.7% in December 2023. Notably, the spike in Annual Passenger Transport by taxi and hired car inflation, rising to 5.6% from 2.1% in December 2023, and a substantial 30.7% increase in Annual Church wedding fees, contributed significantly to this uptrend.

Energy fuel and utilities (EFU) inflation on the rise

Annual Energy Fuel and Utilities (EFU) inflation also played a role in the overall inflationary picture, climbing to 7.4% in January 2024 from 6.4% in December 2023. This increase is attributed to the surge in petrol prices by 4.4%, firewood prices by 9.4%, and a notable decrease in diesel prices by minus 6.6% in January 2024 compared to minus 9.1% in December 2023.

Food crops and related items experience marginal increase

Annual Food Crops and Related Items Inflation saw a marginal uptick, reaching 2.6% in January 2024, up from 2.5% in December 2023. This was primarily driven by increases in the prices of vegetables, tubers, plantains, cooking bananas, and pulses.

Notable variations include a 10.7% rise in green cabbage prices and a 4.0% increase in green pepper prices in January 2024.

Inflation by COICOP divisions

According to the Classification of Individual Consumption According to Purpose (COICOP), various divisions contributed to the overall inflation. ‘Recreation, Sport, and Culture’ inflation increased to 1.7%, ‘Personal Care, Social Protection, and Miscellaneous Goods’ inflation rose to 6.4%, and ‘Restaurants and Accommodation Services’ inflation increased to 4.9%. Meanwhile, ‘Alcoholic Beverages, Tobacco and Narcotics’ inflation increased at a slower rate, reaching 3.4%.

Monthly inflation highlights

In the monthly context, Food and Non-Alcoholic Beverages inflation increased by 0.2% in January 2024, rebounding from a 1.3% drop in December 2023. Other notable increases include Housing, water, electricity, gas, and other fuels (0.5%), Personal care, social protection, and miscellaneous goods (0.9%), and Restaurants and Accommodation Services (0.4%).

Sectoral analysis: Health, transport, information and communication

• Health sector: Inflation in the Health division rose to 5.2% for the 12 months ending January 2024, driven by a 13.7% increase in Annual Inpatient Care Services Inflation.
• Transport sector: Transport inflation increased to 2.5%, with Annual Operation of Personal Transport Equipment inflation leading the rise at 4.5%, while Passenger Transport Services inflation decreased to 0.5%.
• Information and communication: Annual Inflation for Information and Communication reached 1.8%, primarily influenced by a 2.6% increase in Information and Communication Services Inflation.

The intricate dynamics of inflation in different divisions highlight the need for a comprehensive understanding to navigate these economic shifts effectively.