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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, at 4.9 per cent in the year ending August 2026, slightly down from 5.0 per cent in July.
The latest Consumer Price Index (CPI), released yesterday at Statistics House, showed that price pressures on high-income households were driven largely by rising costs in information and communication, as well as alcoholic beverages, tobacco and narcotics.
Principal Statistician in charge of Price Statistics at UBOS, Juliet Nakayenga, said annual inflation for information and communication in Kampala’s high-income group rose to 2.5 per cent in August, from 0.7 per cent in July.
Annual inflation for alcoholic beverages, tobacco and narcotics also increased to 2.0 per cent in August, from 0.8 per cent in July.
Jinja records second-highest inflation
Jinja Centre recorded the second-highest annual inflation rate at 4.8 per cent in August, up from 4.2 per cent in July.
UBOS attributed the increase mainly to food and non-alcoholic beverages inflation, which rose to 4.1 per cent in August from 2.5 per cent in July.
Information and communication charges also rose sharply in Jinja Centre, with inflation in the category increasing to 6.1 per cent in August from 1.9 per cent in July.
Mbale Centre recorded the third-highest inflation rate at 4.3 per cent, up from 3.8 per cent in July.
Kampala’s middle-income group followed with inflation of 4.1 per cent, compared with 3.7 per cent in July.
Masaka Centre recorded annual inflation of 4.0 per cent, slightly lower than the 4.1 per cent registered in July.
Arua Centre also recorded an increase, with inflation rising to 3.4 per cent in August from 2.8 per cent in July.
In contrast, Gulu Centre’s inflation rate declined to 3.0 per cent in August from 3.3 per cent in July.
Mbarara Centre recorded the lowest annual inflation rate among the areas highlighted by UBOS, at 2.9 per cent, down from 3.2 per cent in July.
UBOS attributed the decline partly to a slowdown in inflation for housing, water, electricity, gas and other fuels, which fell to 1.4 per cent in August from 2.6 per cent in July.
“In addition, annual transport inflation registered 1.3 per cent in August compared to 2.3 per cent registered in July 2026,” Nakayenga said.
National inflation rises to 4.1%
At the national level, Uganda’s annual headline inflation increased to 4.1 per cent in the year ending August 2026, from 4.0 per cent in the year ending July.
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 per cent in August from 3.4 per cent in July, driven by higher prices for rice, dried fish, maize flour and cassava flour.
Annual food crops and related items inflation also increased to 2.1 per cent in August from 1.6 per cent in July.
Nakayenga attributed the increase to higher prices for Irish potatoes, pineapples, mangoes and matooke.
Annual services inflation, however, declined to 4.5 per cent in August from 4.8 per cent in July, partly due to slower price increases in international airfares and hairdressing services.
Inflation for international flights fell to 17.0 per cent in August from 24.1 per cent in July, while hairdressing inflation declined to 0.8 per cent from 3.7 per cent.
Prices of crude waragi also continued to decline, with annual inflation standing at minus 3.6 per cent in August, compared with minus 2.7 per cent in July.
Fuel and energy remain key pressure
Annual Energy, Fuel and Utilities (EFU) inflation stood at 14.3 per cent in August, down slightly from 14.9 per cent in July.
UBOS said annual charcoal inflation fell to 2.1 per cent from 4.5 per cent in July.
Petrol prices, however, remained significantly higher, with annual inflation at 28.5 per cent in August, compared with 29.0 per cent in July.
Kerosene prices recorded annual inflation of 31.1 per cent, compared with 31.86 per cent in July.
Bank of Uganda maintains cautious outlook
Despite the slight increase in overall inflation, the Bank of Uganda remains cautious about the outlook, particularly because of risks from higher global energy prices.
Bank of Uganda Governor 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 per cent over the next 12 months and headline inflation projected to average 5.5–6.0 per cent over the same period.
He warned, however, 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,” 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 per cent, allowing policymakers time to assess global developments and their potential impact on Uganda’s inflation outlook.
Inflation risks remain
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.
A stronger-than-expected positive output gap could also create additional demand-side inflationary pressure.
On the other hand, favourable weather conditions that improve agricultural production and food supplies could help ease inflation.
Weaker domestic economic growth could also reduce inflationary pressures, particularly if prolonged conflict in the Middle East weighs on global growth, domestic demand and commodity prices.
Understanding the Consumer Price Index
UBOS produces four major Consumer Price Indices: 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, while 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.
**National Average Retail Prices of selected commodities **
| Commodity Name | Quantity | Unit of Measure | Average Price August 2025 in shilling | Average price August 2026 in shilling | | Cassava Flour | 1 | Kg | 1,837 | 2,212 | | Smoked Nile Perch | 1 | Kg | 34,187 | 41,478 | | Mukene | 1 | Kg | 17,600 | 22,321 | | Matooke | 1 | Kg | 1,035 | 971 | | Irish Potatoes | 1 | Kg | 1,704 | 1,870 | | Pineapple | 1 | Kg | 1,584 | 1,955 | | Dry Beans | 1 | Kg | 4,372 | 4,061 | | Off layer | 1 | Kg | 14,627 | 14,922 | | Cabbage | 1 | Kg | 905 | 1,099 | | Pumpkin | 1 | Kg | 1,278 | 1,420 | | Petrol | 1 | Kg | 5,099 | 6,529 | | Diesel | 1 | Kg | 4,733 | 6,647 |
