Uganda: Fuel Hikes Threaten Central Bank Inflation Target

AllAfrica English (current) En Français Toggle navigation My Account Toggle navigation AllAfrica My Account English (current) En Français Uganda: Fuel Hikes Threaten Central Bank Inflation Target 24 July 2026 The Independent (Kampala) Kampala — Fuel prices continue to oscillate between 6,300 shilling (1.68 dollars) and 6,700 shillings per litre for both petrol and diesel, contributing most to the high average prices of goods and services in the second quarter of 2026. According to the Uganda Bureau of Statistics (UBOS), at the end of June 2026, the average price of goods and services has risen by 3.7 percent over the previous 12 months, continuing the trend that started in March. I'm that month, inflation was recorded at 2.9 percent, up from 2.8% in February. It has since been rising, meaning that the pace of increase in the average prices was every subsequent month. It hit 3 percent in April, and rose to 3.2 percent in May before peaking at 3.7 last month. This trend corresponds with the timelines of the fuel supply disruptions that started at the end of February (when pump prices in Kampala were averaging 5,000 shillings per litre) with the war in the Middle East. Follow us on WhatsApp | LinkedIn for the latest headlines In May, for example, UBOS recorded the inflation for the energy, utilities and fuel at 9.1 percent, but this increased to 11.9% for the 12 months ending June, reflecting the raid rise in the prices during June. In particular, fuel prices rose fastest, posting an inflation rate of 26.2% at the end of June, compared to 16.6 recorded at the end of May. Diesel prices were rising fastest and posted an inflation rate of 37.3 percent up from 27.5 percent at the end of May. These fuel price increases were largely responsible for the rate of increases in the costs of transport. In the year ending June, passenger transport fares increased at a rate of 11.9 percent, compared to the 9.9 percent rate recorded at the end of May. This was seen in the increases in the bus and taxi fares on most routes across the country, as operators sought to maintain profitability amidst the fuel price hikes. Away from the effects of fuel prices, UBOS reports also note rising prices of beef and rice, though generally, the food inflation remained stable at 0 percent. This was because of matooke which recorded inflation of minus 6.6 compared to minus 3.4 at the end of May. Other significant drops were in the prices of dry beans, carrots and onions, which reflects seasonal trends. Despite these Second Quarter increases, consumer price growth remains below the Bank of Uganda's medium-term target of 5%. To maintain this stability, the Central Bank Rate (CBR) was held at 9.75%. Close Sign up for free AllAfrica Newsletters Get the latest in African news delivered straight to your inbox Top HeadlinesUgandaPetroleum Submit By submitting above, you agree to our privacy policy. Success! Almost finished...We need to confirm your email address.To complete the process, please follow the instructions in the email we just sent you. Error! Error! There was a problem processing your submission. Please try again later. Bank of Uganda Governor Michael Atingi-Ego has remained cautious saying, a faster upward inflation rate is possible depending on factors like weather affecting agricultural production, as well as geopolitics, especially how long the war on Iran would last. The longer the conflict takes, the higher the vulnerability of the economy to high inflationary figures. Apart from the difficulty in shipping petroleum products through the Strait of Hormuz which leads to delayed deliveries and higher insurance and transport costs, refineries have also increased the costs amidst rising crude Oil prices. Prices surged above 95 dollars a barrel on Tuesday as US officials seemed to downplay prospects of positive outcomes from peace talks with Iran. And strikes continued for the 12th day, since a peace agreement collapsed, with President Donald Trump threatening to destroy Iranian bridges or power plants, should Iran attack any more ships in the Red Sea. With Iran-allied Houthi Rebels threatening to blockade sea routes to Saudi Arabia, the Middle East conflict escalation could confirm Atingi-Ego's fears of inflation rate rising further. Read the original article on Independent (Kampala). Tagged: Uganda East Africa Business Petroleum Copyright © 2026 The Independent. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here. AllAfrica publishes around 600 reports a day from more than 90 news organizations and over 500 other institutions and individuals, representing a diversity of positions on every topic. 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