Kampala’s high-income households recorded the highest annual inflation rate among the geographical areas and income groups measured by the Uganda Bureau of Statistics, with inflation standing at 4.9 percent in the year ending August 2026, down slightly from 5.0 percent recorded in July.
The latest Consumer Price Index (CPI), released yesterday at Statistics House, shows that the increase in high inflation on high income class was largely driven by rising prices in information and communication, alcoholic beverages, tobacco and narcotics.
Principal Statistician in-charge of Price Statistics at Ubos Juliet Nakayenga said annual information and communication inflation in the Kampala high-income group rose to 2.5 percent in August, from 0.7 percent in July.
She added that annual inflation for alcoholic beverages, tobacco and narcotics increased to 2.0 percent in August, compared with 0.8 percent in July.
Jinja records second-highest inflation
Jinja Centre registered the second-highest annual inflation rate at 4.8 percent in August, up from 4.2 percent in July.
According to Ubos, the increase was mainly driven by food and non-alcoholic beverages inflation, which rose to 4.1 percent in August from 2.5 percent in July.
Information and communication charges also increased significantly in Jinja Centre, with inflation in the category rising to 6.1 percent in August from 1.9 percent in July.
Mbale Centre recorded the third-highest inflation rate at 4.3 percent, up from 3.8 percent in July.
Kampala’s middle-income group followed with inflation of 4.1 percent, compared with 3.7 percent in July.
Masaka Centre recorded annual inflation of 4.0 percent, slightly lower than the 4.1 percent registered in July.
Arua Centre also experienced an increase in inflation, rising to 3.4 percent in August from 2.8 percent in July.
In contrast, Gulu Centre’s inflation rate declined to 3.0 percent in August from 3.3 percent in July.
Mbarara Centre recorded the lowest annual inflation rate among the areas highlighted by Ubos, at 2.9 percent, down from 3.2 percent in July.
Ubos attributed the decline in Mbarara partly to a slowdown in inflation for housing, water, electricity, gas and other fuels, which fell to 1.4 percent in August from 2.6 percent in July.
“In addition, annual transport inflation registered 1.3 percent in August compared to 2.3 percent registered in July 2026,” Ms Nakayenga said.
National inflation rises to 4.1 percent
At the national level, Uganda’s annual headline inflation increased to 4.1 percent in the year ending August 2026, compared with 4.0 percent in the year ending July.
Ms Nakayenga said the increase was mainly driven by annual core inflation and food crops and related items inflation.
Annual core inflation rose to 3.5 percent in August from 3.4 percent in July. The increase was driven by higher prices of rice, dried fish, maize flour and cassava flour.
Annual food crops and related items inflation also increased to 2.1 percent in August from 1.6 percent in July.
Ms Nakayenga attributed the increase to higher prices of Irish potatoes, pineapples, mangoes and matooke.
However, annual services inflation declined to 4.5 percent in August from 4.8 percent in July. The decline was partly attributed to slower price increases in international airfares and hairdressing services. Inflation for international flights fell to 17.0 percent in August from 24.1 percent in July, while hairdressing inflation declined to 0.8 percent from 3.7 percent.
The prices of crude waragi also continued to decline, with annual inflation standing at minus 3.6 percent in August compared with minus 2.7 percent in July.
Fuel prices remain a major pressure.
Annual Energy, Fuel and Utilities (EFU) inflation stood at 14.3 percent in August, down slightly from 14.9 percent in July.
Ubos said annual charcoal inflation fell to 2.1 percent from 4.5 percent in July.
Petrol prices, however, remained significantly higher, with annual inflation at 28.5 percent in August compared with 29.0 percent in July. Kerosene prices recorded annual inflation of 31.1 percent, compared with 31.86 percent in July.
Despite the slight increase in overall inflation, the Bank of Uganda remains cautious about the outlook, particularly amid risks arising from higher global energy prices.
Bank of Uganda Governor Dr Michael Atingi-Ego said in the Monetary Policy Statement that the inflation forecast had been revised downward, with core inflation projected to average 4.0–4.5 percent over the next 12 months and headline inflation projected to average 5.5–6.0 percent over the same period.
However, he warned that higher food, fuel and other input prices could still translate into broader inflationary pressures.
“Therefore, clarity on the inflation outlook, particularly its path and underlying drivers, is needed before considering further policy action,” Dr Atingi-Ego said.
He added that the elevated risk of energy-related price shocks feeding into domestic inflation expectations warranted a cautious monetary policy stance.
Against this backdrop, the Monetary Policy Committee maintained the Central Bank Rate at 9.75 percent.
The Bank of Uganda said risks to the inflation outlook remain tilted to the upside. These include a prolonged global inflationary surge that could prompt major central banks to raise interest rates, increasing depreciation pressure on the Uganda Shilling as investors seek safer assets.
Escalating geopolitical tensions could also disrupt global supply chains, push up international oil prices and increase domestic energy and transport costs.
Adverse weather conditions pose another risk by reducing agricultural output and driving up food prices.
Background
Ubos produces four major Consumer Price Indices. These are the headline inflation index, core inflation index, food crops and related items index, and Energy, Fuel and Utilities (EFU) inflation index. The headline index covers all items in the consumer basket. Core inflation excludes items considered highly volatile, such as food crops, fuel and utilities. The food crops and related items index covers food items while excluding processed foods, while the EFU index measures inflation relating to energy, fuel and utilities.
