Average 2024 inflation registered at 3.3%

Kampala, Uganda | THE INDEPENDENT | The country’s inflationary landscape has seen a mixture of modest improvements and persistent challenges. According to the Uganda Bureau of Statistics (UBOS), the Annual Average Headline Inflation for 2024 was registered at 3.3 percent, a significant improvement from the 5.4% recorded in 2023.

The drop reflects a combination of price stability in several key sectors and a deceleration in core inflationary pressures, driven by reduced costs in energy, utilities, and food. While the annual inflation rate paints a picture of relative stability, there are critical details to consider.

Data from UBOS shows that the overall inflation rate of 3.3 percent in 2024 was largely influenced by Annual Core Inflation, which registered an average rate of 3.6 percent, down from 4.7 percent in 2023. This improvement reflects year-long relative stability in the prices of essential commodities and services, such as clothing, household equipment, and healthcare.

However, areas such as restaurants and accommodation services experienced inflationary spikes, rising to 4.8 percent in the year ending December 2024 from 3.8 percent in the same period that ended November 2024.

The food sector has been a mixed bag in 2024. While the Annual Food Crops and Related Items Inflation remained negative at -0.7 percent, it represented a notable improvement from the -4.0 percent, seen in November. Declines in prices of key staples like fresh beans, maize flour, and rice contributed to this trend, though price stability was offset by rising costs for other items such as matooke, tomatoes, and avocados.

Energy and fuel costs, a critical factor influencing Uganda’s economy, recorded significant volatility. Annual Energy, Fuel, and Utilities (EFU) Inflation stood at 1.0 percent in December, down from 2.2 percent in November. While lower charcoal prices contributed to this decline, fluctuations in liquid fuel prices, especially petrol and diesel, remained a concern.

The improved agricultural yields due to favourable weather conditions contributed to increased crop production, alleviating the pressure on food prices. However, challenges remain, particularly with perishables like tomatoes and onions, which saw significant price swings.

The other is policy Interventions, such as measures introduced by the Bank of Uganda to manage liquidity and curb inflationary pressures in the aftermath of global economic shocks have been effective. Interest rate policies and government subsidies in certain sectors also played a role in stabilizing costs.

According to UBOS, Despite these gains, Uganda’s inflationary environment continues to exhibit vulnerabilities. The service sector, including transportation and accommodation, remains susceptible to inflationary pressures, with passenger transport prices increasing steadily over the year.

Similarly, costs in education and healthcare, both essential sectors registered minimal declines but remain high relative to household incomes.

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