Rising prices, widening trade deficit put pressure on the economy

What the report says

Uganda’s economy faced renewed pressure in September as the cost of living climbed, driven by higher food prices, transport fares and energy costs, according to The Independent Uganda’s report based on government and central bank data. The report said unfavorable weather affected food supplies, while higher production costs were reinforced by transport and fuel expenses. It added that the weaker shilling and a larger merchandise trade deficit intensified the strain.

The Ministry of Finance’s September 2026 performance report showed annual headline inflation rising to 4.6 percent from 4.1 percent in August. Food-related inflation increased sharply, while energy, fuel and utilities also became more expensive. The article noted that prices for processed foods rose as well, alongside transport costs such as taxi and bus fares. The Bank of Uganda responded by increasing the Central Bank Rate from 9.75 percent to 12 percent at an October monetary policy meeting, aiming to curb inflation and stabilize expectations.

The report also highlighted external pressures. The shilling depreciated against the US dollar in September, which can make imports more costly and feed into local prices. At the same time, Uganda’s trade deficit widened in August as imports grew faster than export earnings. Gold remained a major export, accounting for a large share of receipts during the month.

Despite the cost pressures, the article said business activity still showed expansion, though at a slower pace. Broader indicators remained above the level associated with growth, suggesting the economy was still resilient even as inflation and exchange-rate challenges mounted.