KAMPALA — Uganda’s private sector remained in expansion territory in August 2026, although inflation edged higher and the shilling weakened against the US dollar, according to the latest Performance of the Economy report by the Ministry of Finance, Planning and Economic Development (MoFPED).
The report, released on September 18, shows that the Purchasing Managers’ Index (PMI) stood at 55.0 in August, remaining above the 50-point threshold that separates expansion from contraction.
The Business Tendency Index (BTI), which measures business sentiment, rose to 59.6 from 56.1 in July, pointing to increased optimism about business conditions and economic activity in the coming months.
The Composite Index of Economic Activity (CIEA), reported with a one-month lag, stood at 192.1 in July, compared with 192.9 in June.
Inflation Edges Up
Annual headline inflation increased marginally to 4.1% in August, from 4.0% in July.
According to the Ministry, the increase was mainly driven by higher prices for selected food crops and core goods.
However, inflation for energy, fuel and utilities eased from 14.9% to 14.3% during the month.
The report noted that the movement in inflation reflected differing price pressures across major components of the consumer basket, with food and core goods pushing headline inflation higher while energy, fuel and utilities provided some relief.
Shilling Weakens
The Ugandan shilling depreciated by 0.7% against the US dollar in August, averaging Shs3,730.25 per dollar, compared with Shs3,704.51 in July.
The Ministry attributed the depreciation to increased foreign-exchange demand from the energy and manufacturing sectors, which outweighed inflows from commodity exports, non-governmental organisations and remittances.
The movement comes as businesses continue to require foreign currency to finance imports, particularly fuel, machinery and other production inputs.
Exports Rise 10.1%
Uganda’s merchandise exports increased by 10.1% year-on-year, rising from $1.274 billion in July 2025 to $1.403 billion in July 2026.
The increase represents an additional $128.28 million in export earnings.
The Ministry attributed the growth largely to higher receipts from gold, maize, flowers, oil re-exports, beer, cocoa beans, cement and electricity, among other exports.
The latest figures indicate continued growth in Uganda’s export earnings, although the country remains dependent on imports for a range of manufactured goods, fuel and production inputs.
Economic Activity Remains Positive
The Finance Ministry said the performance of the high-frequency economic indicators points to an improvement in private-sector business conditions and continued optimism regarding economic activity.
The PMI remained above the expansion threshold while the BTI registered a stronger reading than in July.
The latest report is part of the Ministry’s monthly monitoring of Uganda’s economic performance, covering developments in the real, financial, fiscal and external sectors.
The Ministry released the Performance of the Economy Monthly Report for August 2026 on September 18 through its Directorate of Economic Affairs.