Annual headline inflation rose to 4 percent over the 12 months to July, driven largely by increased costs of housing, water, and electricity. The increase marks the highest inflation level recorded since September 2025, reflecting a steady rise in the cost of goods and services across the economy.
Ms Juliet Nakyenga, the Uganda Bureau of Statistics (Ubos) principal statistician for price statistics, said the increase was mainly influenced by rising prices in key consumption categories.
‘ … the main driver of the 4 percent inflation was housing, water, electricity, gas and other fuels, which rose by 6.7 percent in the year ending July, compared to 4.9 percent recorded in the same period June,’ she said.
The Classification of Individual Consumption According to Purpose framework enables economists to measure price changes across different categories of household consumption, providing critical data for policy formulation aimed at maintaining price stability. Housing, water, electricity, gas and other fuels carry a weight of 104.1617 in the Consumer Price Index, making it the second most influential category after food and non-alcoholic beverages, which has a weight of 270.5390. During the same period, food and non-alcoholic beverages inflation rose to 3.1 percent, up from 2.6 percent recorded in June.
Transport costs also continued to climb, with inflation in the sector increasing to 9.3 percent in July 2026 from 8.8 percent the previous month. Transport inflation reflects rising costs of moving people and goods, often driven by higher fuel prices, public transport fares, and freight charges. Ubos data further shows increases in other categories, with furnishings, household equipment and routine household maintenance recording a rise to 2.9 percent in July from 2.5 percent in June. Alcoholic beverages, tobacco and narcotics inflation increased slightly to 1 percent from 0.6 percent, while clothing and footwear saw a marginal increase to 1.3 percent from 1.2 percent in June.
Education services inflation remained unchanged at 5.7 percent, while insurance and financial services inflation eased to 10.1 percent from 12.6 percent in June. Recreation, sports and cultural services recorded a slight decline to 0.7 percent from 0.9 percent, while restaurant and accommodation services inflation edged down to 3.2 percent from 3.3 percent. Health sector inflation dropped to 1.6 percent in July 2026 from 1.8 percent in June.
Information and communication services inflation remained relatively stable at 1.0 percent, compared to 1.1 percent in June. Personal care, social protection and miscellaneous goods and services inflation stood at 1.8 percent in July 2026, slightly down from 1.9 percent recorded in June. Despite the increase in headline inflation, annual core inflation, which excludes volatile items such as food and energy, remained unchanged at 3.2 percent. Bank of Uganda relies on core inflation as a key indicator for monetary policy decisions, targeting an inflation rate of 5 percent to ensure economic stability.