Business and Finance

Uganda inflation rate surges to 28.3%

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Uganda's year-on-year inflation rate leapt to 28.3 percent in September from 21.4 percent a month earlier, the highest level since January 1993, on the back of food prices, the Uganda Bureau of Statistics (UBOS) said on Friday.

Analysts said the bigger-than-expected inflation jump increased the chances the Bank of Uganda would raise its benchmark lending rate next Tuesday for the third month in a row since it was first launched in July.

UBOS said the consumer price index leapt 6.8 percent from a month earlier, driven by an 8.4 percent increase in the cost of items such as plantains, sugar, potatoes, cassava, pineapples, meat, chicken, eggs, fish and bread.

"The increase in prices of these food items is mainly attributed to reduced supplies to the market during the month," UBOS said at a news conference.

"The main inflation driver remained food inflation. Food inflation rose to 50.4 percent for the year ending September 2011 from 42.9 registered in August 2011," UBOS said.

"Food crops registrered an annual inflation rate of 38.8 percent for the year ending September 2011, compared to 33.7 for year ended August 2011," it said.

The core rate of inflation — which excludes food crops, fuel, electricity and metered water — also jumped to hit 27.5 percent in September from a revised 20.1 percent in August. The August rate had previously been given as 20.0 percent.

The Bank of Uganda said in July when it launched its Central Bank Rate (CBR) at 13 percent that it would target 5 percent core inflation in the medium term. The core inflation rate stood at 12.2 percent at the time.

The Bank of Uganda raised the CBR to 14 percent in August and to 16 percent at the start of September. Reuters

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