At the extra-ordinary Monetary Policy Committee (MPC) meeting held in July 2022, the Bank of Uganda increased the Central Bank Rate (CBR) by 1 percentage point to 8.5 percent.
BoU deputy governor, Dr Michael Atingi-Ego, said in a Monetary Policy Statement for July that the inflation outlook is significantly uncertain, with the balance of risks tilted to the upside.
“Inflation continues to rise largely influenced by the external cost pressures stemming from higher global food and energy prices, persisting global production and distribution challenges as well domestic rising food prices due to dry weather across the country,” noted.
He said the annual headline and core inflation rose to 6.8 percent and 5.5 percent in June 20022 from 6.3 percent and 5.1 percent in May 2022, respectively.
Annual food crop inflation has sharply risen from 0.7 percent in February 2022 to 14.5 percent in June 2022.
He said the rising food and energy prices intensified by a weaker Uganda shilling, have worsened the inflation outlook for the remaining part of 2022 and into 2023.
“The headline and core inflation are now forecast to average to 7.4 percent and 6.3 percent, respectively, in 2022 slightly higher than the 7.2 percent and the 6.1 percent that was projected in the June 2022 forecast round.”
According to him, inflation is forecast to peak in the second quarter of 2023 before gradually declining to stabilize around the medium-term target of 5 percent by mid-2024.