Prices of basic goods and services rose at a faster pace in Uganda and Kenya in July, piling pressure on household incomes for those living in the two East African countries.

The Uganda Bureau of Statistics (UBS) on Wednesday said that the inflation rate – which is the pace at which prices of basics goods and services go up – rose to 5.1 per cent in July up from 3.4 per cent in June, the fastest pace since December last year.

Likewise, the Kenya National Bureau of Statistics (KNBS) also said that the country’s inflation rate jumped to 6.02 per cent in July from 4.91 per cent in June, the fastest pace since August 2012 when it stood at 6.09 per cent.

The two statistics agencies said that the inflation rate rose as a result of price increases in food stuffs, energy, pharmaceuticals and housing.

KNBS said that the housing, water, electricity, gas and other fuels index rose by 0.13 per cent due to increases in house rent and charcoal, the transport index rose by 0.98 per cent due to increases in pump prices of petrol and diesel and public transport fares and the health index rose by 0.95 per cent due to increases in doctors charges and some medicines.

“The increased has been blamed on the increased in food inflation and taxes that took effect starting this July," said Sam Kaisiromwe, senior statistician for the national account, UBS.

In Uganda, food inflation went up as a result of drought in central and western parts of the country, water prices went up as a result of the reintroduction of Value Added Tax, while beverages and alcohol prices went up after the budget that increased taxes which have been passed down to consumers.

Bank of Uganda (BoU) and the Central Bank of Kenya (CBK), early this month left the benchmark lending rates in the two countries steady citing risks of a rise in the inflation rate and current account deficits which could affect the two exchange rates.

BoU left its benchmark rate unchanged at 11 per cent while CBK left its benchmark rate at 8.5 per cent to provide time for previous Monetary Policy Committee (MPC) decisions to work through the economy.

Early this month Prof Emmanuel Tumusiime-Mutebile, BoU’s governor said that the indirect tax increases announced in the 2013/14 budget are expected to have one-off impact on prices, the overall impact on the consumer price index will be small, probably less than 0.5 per cent.

In Kenya, the latest market perception survey done before the most recent MPC meeting showed that 54 per cent of bank executives believed that the inflation rate will rise, 32 per cent expected it to remain the same while 14 per cent saw a decline.

Similarly, 46 per cent of non-bank executives now believed prices of basics would rise at a faster pace, 42 per cent expected the pace to remain the same while only 12 per cent expected a slower pace.

Prof Njuguna Ndungu, CBK governor said that recent wage conflicts, the demos against the VAT Bill and data in the month of June showed inflation rising but moving to the target of five per cent.