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Working Paper 152 - Dynamics of Inflation in Uganda


East Africa witnessed in October of 2011 a considerable surge in inflation reaching on average 20%. This rise in price has been an issue of concern for policymakers and the general public. In Ethiopia inflation rate reached 34%, and inflation attained its highest value of 18.9% in Kenya the very same month. Tanzania was not an exception to the rule. It witnessed a sharp rise in inflation with a maximum of 17.9 in October 2011. Uganda recorded the second highest level of inflation in the region hitting 30.5% during the same period. As stressed by the IMF report of 2011, such an increase in inflation has negative implications for the countries at large and particularly for the poor. Given that the majority of the population lives in rural part of these countries, the consequences can be enormous. It erodes the standard of living of the population and hence it can lead to political unrest of the same magnitude to those that occurred in the Maghreb and the Middle East.

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