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Inflation Surges Ahead Of Elections :: Uganda Radionetwork
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Inflation Surges Ahead Of Elections

Bank of Uganda attributes the rising figures of inflation to a hike in food crop prices and the volatility of the exchange rate during the two months in focus.
Inflation figures are beginning to surge four months to the general elections. Figures released by Bank of Uganda this afternoon show that the annual core inflation rose from 4.8 percent to 7.2 percent while headline inflation rose from 5.5 to 6.7 percent from the months of August to September. 

 

 

Bank of Uganda attributes the rising figures of inflation to a hike in food crop prices and the volatility of the exchange rate during the two months in focus.  Uganda\'s economy is known to take the heat of inflation during elections due to the heavily monetized polls. After the 2011 elections, the Ugandan economy registered double digit inflation for over 8 months.

 

 

According Emmanuel Tumusiime Mutebile, the governor of Bank of Uganda, the inflation will continue to rise before the financial year ends adding that they have been forced to set the Central Bank Rate-CBR at 17 percent from 16 percent last month. The Central Bank Rate is the interest rate at, which Commercial banks borrow from the central bank.

 

 

The two reasons advanced are that the anticipated El-nino rains are likely to destroy crops and force the food crop prices to remain high and that the exchange rate will remain volatile due to both domestic and external market pressures.  The announcement is likely to drive the lending rates of banks up to over 28% and make borrowing capital harder.   

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