Uganda Inflation Slows First Time in Three Months on Food Costs

Uganda’s inflation slowed for the first time in three months in January after prices of some food items declined on increased supplies, the Uganda Bureau of Statistics said.

Annual consumer prices eased to 4.9 percent in January from a revised 5.3 percent the previous month, Chris Mukiza, the bureau’s director of macroeconomics statistics, told reporters today in Kampala, the capital. Monthly prices dropped by 0.3 percent from a rise of 0.2 percent a month earlier, he said.

Slowing inflation may give the central bank room to cut its benchmark interest rate from the present 12 percent, said Stephen Kaboyo, managing director of Kampala-based Alpha Partners.

“The central bank is faced with growth challenges and may slightly cut the rate,” he said by phone. “We may see a 50 basis-point cut as it focuses on growth.”

The economy may grow by 4 percent to 4.5 percent in the 12 months through June from 3.2 percent a year earlier, the lowest rate in 25 years, the central bank said on Dec. 4.

Annual underlying inflation, which excludes food crops, fuel, electricity and metered water, quickened to 5.6 percent from 4.6 percent in December, the bureau said.

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