Uganda inflation targets crushed by fuel price rise


KAMPALA, Uganda (eTN) – The fast rise in recent weeks of all types of fuel, combined with a shortage of diesel, which is gradually now easing again in the region following a major delivery to the port of Mombasa, has driven inflation to new levels.

The cost of fuel impacts on all sectors of the economy, and influences the cost of power production and transportation, amongst other factors. Much of Uganda’s power is now generated with thermal plants, and the planned conversion to the cheaper heavy fuel oil plants, from the expensive diesel plants, is not progressing fast enough.

At present fuel price rises, the eventual conversion will in fact only cushion the expected tariff increases slightly, as by then the cost of heavy fuel oil may have risen to the levels of diesel, as it costs now or even higher.

Food prices too are suffering an upwards trend, as is the general cost of transport for both passengers and goods. Visitors to the region are well advised to check with their travel and safari agents on any looming surcharges caused by rising fuel cost, in particular when using chartered aircraft or embarking on long trips by road.

It is generally expected that all forecast targets for inflationary increases will be substantially exceeded during 2008, hitting the poorest in society once again the hardest, as incomes are expected to stagnate while prices keep climbing. This will make the challenges for the East African Finance Ministers even greater than usual

Meanwhile, the East African Community core countries Kenya, Tanzania and Uganda will all have the annual budgets read on June 12, publicly presenting the annual financial forecasts, predictions and tax/fiscal measures to the respective parliaments. Rwanda and Burundi have still to adjust their financial years to come in line and this is expected to materialize in due course.