By David Mwanje
Uganda has entered the new year on a stable economic footing, with low inflation helping to boost confidence among businesses and households ahead of the January 15 presidential and parliamentary elections.
Latest figures from the Uganda Bureau of Statistics show that annual headline inflation stood at 3.1 percent in December 2025, unchanged from November and well below the Bank of Uganda’s medium-term target of 5 percent. The steady rate points to sustained fiscal and monetary discipline as the country heads into a critical election year.
Core inflation, which excludes food crops and energy prices, eased slightly to 3.1 percent from 3.2 percent, indicating that underlying price pressures remain contained. Services inflation also declined to 4.0 percent, mainly due to slower price increases in restaurants and accommodation. Core goods inflation rose marginally to 2.5 percent, driven largely by higher prices for fish and clothing.
Food crop inflation increased to 4.4 percent from 4.0 percent, reflecting higher prices for cabbage, passion fruits and cassava. The rise was partly offset by a decline in onion prices. Inflation for energy, fuel and utilities edged up to 1.4 percent, largely due to higher firewood and charcoal prices, while petrol prices posted a slight increase.
On a month-to-month basis, headline inflation rose to 0.5 percent in December after falling in November, mainly due to seasonal food price movements. Average headline inflation for the 2025 calendar year stood at 3.6 percent, up from 3.3 percent in 2024, but still within levels that point to overall price stability.
The Bank of Uganda has kept the Central Bank Rate at 9.75 percent, maintaining a balance between supporting economic growth and keeping inflation under control. This stance has helped support projected economic growth of between 6.5 and 7.0 percent in the 2025–26 financial year.
Inflation trends varied across regions. Kampala’s high-income areas recorded inflation of 4.2 percent, while some upcountry towns, including Mbale, registered much lower rates. Analysts say the differences underline the need for continued investment to reduce regional imbalances.
Although election periods often come with short-term demand pressures, economists expect the impact on prices to remain limited. Headline inflation is forecast to rise slightly to between 3.3 and 3.5 percent in early 2026 due to seasonal food factors, while core inflation is expected to remain stable.
