Bank of Uganda has today released the monetary statement for the month of December indicating a slight decrease in the annual headline inflation from the 4.8% registered in October to 4% in November.
The central bank further indicated that it will maintain the central bank rate (CBR) at 9.5% for the second time in the raw.
The rediscount rate and the bank rate will also be maintained at 13.5% and 14.5% respectively.
While reading out the monetary statement today at the BoU offices in Kampala, the deputy Governor Bank of Uganda Dr Louis Kasekende noted that the decrease in the inflation rate is attributed to a recommendable fall in the food crop prices whose inflation declined from 7.9% in October to 2.3% in November.
He further noted the stability of the exchange rate in the last 12 months; the annual core inflation has declined to 3.3% from the 3.5% registered in October with the annual inflation for electricity, fuel and utilities declining from 14.1% to 13.7% in the same time.
However, the core inflation is expected to pick up to 5% as spare capacity in the economy is reduced.
Figures from the 2016/2017 Uganda Bureau of Statistics report indicate that the economy grow by 4% boasted by improved performance in the agriculture and service sector and is even projected to rise to 5% in FY 2017/2018 and expected to expand to a faster pace in the medium term with growth in public investment, growth in consumption and the current stimulatory monetary policy.
However, according to the deputy governor, this slight growth is not evenly distributed as sectors like construction and manufacturing continue to experience dormant growth.
“Although BoU has maintained the CBR slightly down and the borrowing rates in banks have also come down, the cost of credit is still high and dormant loans across banks are also a bit high. If the manufacturing sector is to catch up, we will need to give affordable long term loans from development banks like bank of Africa,” Kasekende noted.