(Updates with comment by economist in third paragraph.)
Sept. 30 (Bloomberg) -- Uganda’s inflation rate jumped to the highest level in more than 18 years this month, bringing pressure to bear on the central bank to raise interest rates for the third time in three months when it meets next week.
Inflation accelerated to 28.3 percent from 21.4 percent in August, as the cost of food rose 50.4 percent from a year earlier, the Uganda Bureau of Statistics said in a statement handed to reporters today in Kampala, the capital. The overall rate was the highest since January 1993, while inflation rose 6.8 percent in the month, it said.
“We should see the central bank responding to this level of inflation by increasing its rate,” Augustus Nuwagaba, managing director of REEV Consult International Ltd., said in a phone interview today.
Uganda’s central bank on Sept. 6 raised its benchmark lending rate for the second time since it was introduced in July to rein in inflation and curb a slump in the shilling. The currency is the world’s second-worst performer this year, after neighboring Kenya’s, having weakened 19 percent since January, according to data compiled by Bloomberg.
The bank’s Monetary Policy Committee will meet on Oct. 4 to decide on where to set interest rates, currently at 16 percent. The MPC raised borrowing costs by 2 percentage points at its last meeting and by 1 percentage point in August.
Underlying inflation, which excludes food, fuel, electricity and metered water, accelerated to 27.5 percent from 20.1 percent last month, the bureau said.
“The main inflation driver remained food inflation,” with prices of staple foods including green bananas, sugar, potatoes, cassava, beef, chicken and fish increasing this month, it said.
Uganda, Africa’s second-biggest coffee producer after Ethiopia, is on a cusp of an oil boom following finds by U.K.’s Tullow Oil Plc and its partners.
--Editors: Paul Richardson, Alastair Reed, Ana Monteiro.
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