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Bad roads, high fuel prices raise inflation in EAC

A combination of poor roads to handle sufficient flow o f goods and ever rising fuel prices are key factors responsible for the rising i n flation rate in the East African Community, Uganda Bureau of Statistics (UBOS) s a id in its monthly Consumer Price Index (CPI) report covering the month of July 2 0 08.

“The situation is worsened by low energy supply. Transporters have to brave the high rate of wear and tear of trucks due to bad roads,” says Ronald Ssombwe, the

senior price statistician at UBOS.

He told a news conference here Friday: “Our infrastructure is unable to handle v olumes of produce and goods to meet the ever rising demand as manifested with po p ulation growth averaging 3 per cent in East Africa.

“So the region is to continue recording rising inflation rate if authorities con cerned do not act quickly.”

With Kenya and Burundi recording rising inflation rates over 20 per cent, Tanzan ia over 15 per cent, Rwanda and Uganda over 10 per cent, Ssombwe said the region a l authorities must find ways to reduce it.

“Uganda, Kenya and Tanzania will face high inflation even if we integrate becaus e our imports sometimes pass through Kenya and Tanzania, while their demand for f ood from Uganda remains high,” he said.

The report shows that Uganda’s inflation rate rose to 13.7 per cent up from 12.5 per cent due to high demand for food from neighbouring countries and the ever-r i sing global fuel prices.

“This is the highest inflation in three years. It was last at 12..6 per cent in April 2005. We are at the peak of the harvesting season for a number of food ite m s but the prices have remained high due to high transport costs and high demand f rom southern Sudan and DR Congo,” Ssombwe noted.

“We have imported inflation from Kenya where our imports pass.. Also, border cha rges are incurred by the products, thus causing an increase in their prices,” he

observed.

He further warned that inflation was likely to rise in the coming months unless the demand for food in the neighbouring countries reduced and global fuel prices

stabilised.

Ssombwe said consumers should prioritise their expenditures, while employers sho uld consider raising salaries and wages so that employees could buy the same goo d s and services they used to purchase.

The Annual Core Inflation (underlying), which excludes food, fuel, electricity a nd metered water, also rose to 12.8 per cent from 12.1 per cent.

He said the finance ministry should curb the rising inflation because it would a ffect working out macro and micro-economic policies for the economy.

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