Uganda: Fuel Hikes Threaten Central Bank Inflation Target

What the report says

AllAfrica, carrying reporting from The Independent in Kampala, says Uganda’s recent fuel price increases are putting pressure on the Bank of Uganda’s inflation outlook. The report says petrol and diesel have been moving between about Shs6,300 and Shs6,700 per litre, and that fuel costs were a major contributor to higher overall prices in the second quarter of 2026.

Citing the Uganda Bureau of Statistics, the report says annual consumer price growth reached 3.7% at the end of June, up from 2.9% in March, 3% in April and 3.2% in May. Energy, utilities and fuel inflation rose to 11.9% in the year to June, while fuel inflation accelerated to 26.2%. Diesel prices were reported as rising even faster, with annual inflation of 37.3% at the end of June.

The Independent linked the inflation trend to fuel supply disruptions that began around the end of February, when pump prices in Kampala averaged about Shs5,000 per litre, and to wider Middle East tensions affecting petroleum shipping and costs. The report says transport fares also increased, with passenger transport inflation rising to 11.9% in the year to June as bus and taxi operators faced higher operating costs.

Despite the price pressures, inflation remained below the Bank of Uganda’s medium-term target of 5%, and the central bank kept its Central Bank Rate at 9.75%. Governor Michael Atingi-Ego was reported as cautious about possible further inflation risks, including weather effects on agriculture and geopolitical disruptions that could keep fuel prices elevated.