East Africa records drop in inflation

Wednesday December 20 2017

A vegetable vendor counting his takings at a

A vegetable vendor counting his takings at a market in Kampala. The Uganda Bureau of Statistics said the country’s inflation slowed from 4.8 per cent year-on-year in October, to 4.0 per cent in November, the lowest since 2015. PHOTO FILE | NATION 

By MARYANNE GICOBI
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Uganda and Kenya recorded the largest drop in inflation in November, attributed to favourable weather conditions that led to a fall in prices of several food items.

The Uganda Bureau of Statistics said the country’s inflation slowed from 4.8 per cent year-on-year in October, to 4.0 per cent in November, the lowest since 2015.
In Kenya, inflation for November eased to 4.73 per cent from 5.72 per cent recorded in October, marking a 54-month low for the cost of living index, which last hit such lows in May 2013, when it stood at 4.05 per cent.

In August, Kenya’s inflation hit a high of 8.04 per cent, outside the Central Bank’s desired band of 2.5 per cent either side of the five per cent target, driven by an increase in food prices occasioned by delayed rains and low food supplies.

The decline in the cost of food comes as a relief to consumers who have been digging deeper into their pockets to meet high food costs attributed to prolonged drought.

Other items such as housing, water, electricity, gas and other fuels recorded a 1.74 per cent increase owing to increases in rent, power and other cooking fuels.

Data shows the drivers for the low annual foodcrop inflation in Uganda were vegetables, which declined to 3.0 per cent and fruits, which dropped to 1.8 per cent.

Core inflation, which excludes food, electricity and metered water, declined to 3.3 per cent from 3.5 per cent.

In the basket of goods used to calculate inflation, food takes up the largest share — 36 per cent — making it the main driver of the cost of living, followed by utilities such as rent, water, electricity, gas and fuels at 18 per cent.

Monetary policy

Both the headline inflation and the core inflation are below the central bank monetary policy of controlling inflation at 5 per cent, meaning that the Bank of Uganda policy has been effective.

In October, the Bank of Uganda cut the rate to 9.5 per cent, lowering it below the psychologically important threshold of 10 per cent for the first time since the bank introduced its inflation-targeting monetary policy in 2011.

In Tanzania, latest data from the National Bureau of Statistics shows that the year-on-year inflation annual rate for November decreased to 4.4 per cent, largely due to slower food and non-alcoholic beverages.

The inflation rate for food consumed at home and away from home decreased to 7.9 per cent in November, from 9.4 per cent recorded in October.

“The annual headline inflation rate for the month of November further decreased to 4.4 per cent from the 5.1 per cent recorded in October,” the bureau said.

The NBS said that the movement of national consumer price indices and inflation rates showed a relatively stable movement of prices from November 2016 to November, this year.

In addition, annual headline inflation rates over the same period have shown a stable trend from 4.8 per cent in November 2016 to 4.4 per cent in November 2017.

Rwanda’s November inflation dropped to 4 per cent from 4.8 per cent in October, attributed to a drop in food and related inflation from 7.9 per cent in October to 2.3 per cent.

Core inflation declined to 3.3 per cent from 3.5 per cent while energy, fuel and utilities fell from 14.1 per cent in October to 13.7 per cent November.