By Elias Biryabarema
KAMPALA, Oct 30 (Reuters) – Uganda’s inflation rate rose to a 3-year high of 5.8% in October, the country’s statistics office said on Friday, a move that follows a sharp slump in its shilling currency in recent months and a jump in oil and food prices.
The year-on-year rise in consumer prices compared with a 4.6% rate the previous month. It marked the fastest pace of inflation since June 2023, when the spike in energy prices following the COVID-19 pandemic and Russia’s invasion of Ukraine was still receding.
The shilling is down almost 15% against the dollar since June. It was trading at around 4,245 per dollar on Friday from 3,614.50 at the end of 2025.
Details of Friday’s inflation figures attributed much of the rise to a steep surge in food inflation, which jumped to 10.7% in October, from 4.5% in September.
Analysts said Friday’s data could drive the central bank to further raise interest rates at its next scheduled meeting on November 12.
The shilling’s sharp fall prompted it to make a 2.25 percentage point emergency hike earlier this month to try to stem soaring local demand for dollars.
It raised its policy rate to 12% from 9.75%, saying the hike was needed to curb rising inflation pressures.
Kampala has also cited both high energy prices and a drop in portfolio flows for the slide in the shilling. Uganda is currently a net importer of oil and consumes about $2.5 billion worth of refined petroleum products annually.
The “Bank of Uganda will be hawkish signalling an aggressive stance to anchor inflation expectations precisely because key macro economic indicators paint a pessimistic picture going forward,” Stephen Kaboyo, a Kampala-based analyst, said.
In tandem with this month’s emergency rate hike, the central bank also raised banks’ reserves ratio to try to provide additional support, while local traders say it has also intervened in the FX market.
In a research note this week, analysts at JPMorgan said the underlying currency market pressure remained, meaning that the central bank would need to act again if the shilling didn’t stabilise.
“If the underlying balance of payments weakness persists and FX pressures re-emerge, we see a higher likelihood of further Bank of Uganda tightening to contain FX-driven inflation risks and reanchor inflation expectations,” the bank’s analysts said.
(Reporting by Elias Biryabarema; Additional Reporting by Vincent Mumo Nzilani; Editing by Vincent Mumo Nzilani, Marc Jones, William Maclean, Toby Chopra)
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