Inflation in Uganda

A short history of inflation in Uganda

Drought and Election Spending (2011 to 2012)

Ugandan inflation peaked at 26.3% in the year to October 2011, from a combination of the same East African drought that struck Kenya and a large increase in public spending around the February 2011 election. The shilling weakened sharply, fuel and food costs rose together, and the two reinforced each other.

The timing was awkward, because the Bank of Uganda had adopted an inflation targeting framework only that July. Its first real test was met with a policy rate raised to 23%, which brought inflation back to single figures within a year and established the new framework's credibility rather faster than a quieter period would have.

Post-Covid Inflation (2021 to 2023)

In Uganda, prices rose fastest in October 2022, at 10.7%. The causes of the post-Covid inflation were global in nature, beginning with the lockdowns: factories and ports closed and the shipping between them fell out of sequence, so goods took longer to make and longer to arrive. Governments had spent heavily supporting household incomes through those closures, so when restrictions lifted there was money waiting to be spent and not enough on the shelves to spend it on. Then in February 2022 Russia invaded Ukraine, disrupting two of the world's largest suppliers of wheat, fertiliser, oil and gas at once, and the cost of everything grown, heated or transported rose with them.

Because the causes were shared, so was the timing: most countries peaked within a few months of one another in late 2022. The major inflation events covers this episode and the others in more detail.