East African Business Week

KAMPALA, UGANDA - When the Bank of Uganda started to exercise a tight monetary policy stance by raising its lending rates to commercial banks month after month, many financial sector analysts scoffed at the strategy as inflation was rising every month.
Even Uganda's central bank governor Mr. Emmanuel Mutebile predicted that he was not expecting the inflation rate in Uganda to subside until February or March 2012.
However, the raising of the Central Bank rates from June is seemingly paying off, after Uganda's runaway inflation started to reduce in the year ending November 2011.
The Uganda Bureau of Statistics, who last week released the annual headline inflation rate for the year ending November 2011, recorded it at 29%, a decline from the revised 30.4% that was registered in the year ending October 2011. This showed an annual decline of 1.4%.
Mr. Chris Mukiza Ndatira, the UBOS director macroeconomic statistics, attributed the November headline inflation decline to a decrease in food inflation as well as the Bank of Uganda's tight monetary policy stance that targets to reduce Uganda's inflation to 5%.
The EAC Central Bank governors who met in Nairobi in October this year also agreed to take tighter monetary policy stances in their respective countries to curb the soaring inflation that is being experienced in the EAC region.
 Apart from Rwanda, that has not experienced worrying inflation levels, the other four partner states have had their times to tell regarding the rise and volatility in prices of commodities and services.
Though Uganda's inflation subsided to 29% in the month, Kenya recorded rising inflation, as the rate rose to 19.7% in the month from 18.9% that was registered in the year ending October 2010.
Kenya's inflation rise according to the Kenya National Bureau of Statistics was due to the rising cost of food, transport, energy and house rent.
The Kenya National Bureau of Statistics showed that over the past one month, the cost of transport and food witnessed the highest increase to drive inflation upwards.
Mukiza also noted that the on and off electricity, commonly referred to as load shedding in Uganda has contributed to increased cost of production hence the need for manufacturers to hike their products.
"This is showed in the annual energy, fuel and utilities inflation rate that rose to 11.5% for the year ending compared to 10.1% it was in the year ending October," explained Mukiza.
The month to month index showed an increase of 0.1% for the month of November 2011 compared to a 1.3% rise recorded in October 2011.
The core index also went up by 0.5% in November compared to 1.1% rise recorded in October 2011.
The EFU index also rose by 0.1% for the month of November compared to 0.3% increase registered in October, while the monthly food crops index dropped by 1.5% in November.
Mukiza said that services inflation in Uganda went up to 14.3% in November during which prices of motor oils, bicycles and bicycle spare parts as well as those for imported goods especially new clothing and some household and personal goods increased in most centers.