Bank of Uganda Governor, Emmanuel Tumusiime – Mutebile has on Friday said the inflation rate in the country continued to decline in December 2013.
Speaking to a news conference, Mutebile said the Annual headline inflation declined to 6.7 percent in December 2013 from the previous 6.8 percent reflecting mainly the decrease in transport and communication and beverages and tobacco.
The central bank notes that the growth of the economy in the first quarter of the year 2013/2014 was lower than expected. The decline in the agricultural sector growth led to the decline in a GDP growth by 0.6 percent compared with first quarter of 2012/13.
“This decline was precipitated by the drought, which led to a 3.4 percent decline in agricultural output,” he told the press.
However, Mutebile said the bank’s forecasts predict that the inflation will edge down further in the near months to come.
“The Bank of Uganda (BoU) forecasts suggest that inflation will edge down driven by improved food crop harvest, but rise to 6.5 – 7.5 percent during the later part of 2014.”
He added that the potential rise in inflation and its timing will depend largely on movements in the exchange rate, changes in commodity prices and the economic activity spills.
Meanwhile, the bank maintained the Central Bank Rate (CBR) at 11.5 percent in January 2014 and private consumption is expected to rise as credit supply expanded.
Mutebile said the bank will continue to assess the global and domestic economic developments and their implications on the overall for inflation and growth of the Uganda economy.
President Yoweri Museveni said in his New Year message to the nation that the projection for this financial year is that “our economy will grow by 6.2%.”
He hailed the government for constructing electricity dams and tarmac roads which have transformed the economy of the country, emphasizing that it is what the country needs to develop.
“Those three: the electricity, the railway and the roads, are so crucial that if you do not deal with them, the economy will never be transformed,” President Museveni said.
Museveni also emphasized that the three key issues influence greatly the costs of production, the costs of doing business, in an economy.
With these three are undone, the President says it is impossible to industrialize and attract other businesses (services).
