The Bank of Uganda (BoU) has successfully maintained price stability, with headline inflation averaging 3.5% in the financial year 2024/25, comfortably within its medium-term target of 5%. This achievement, announced in the BoU’s Integrated Annual Report, reflects the efficacy of its prudent monetary policy and effective coordination with fiscal authorities.Core inflation, which excludes volatile food and energy prices, averaged 3.9%, up from 3.0% in the previous year. This increase was largely driven by rising prices in services and other goods, the two main components of the core basket. Services inflation rose sharply to 5.6%, up from 4.0%, indicating stronger domestic demand or rising input costs in sectors such as transport, education, and healthcare.In contrast, non-core inflation declined significantly to 1.1%, down from 3.9% in FY 2023/24. This decline was driven by lower inflation in food crops and related items, which fell to 0.5% from 3.5%, and in energy, fuel, and utilities (EFU), which declined to 1.8% from 4.8%. These reductions reflect favourable weather conditions that improved food supply and the continued easing of global energy prices.The BoU’s Monetary Policy Committee (MPC) played a critical role in this outcome, meeting five times during the year to calibrate the Central Bank Rate (CBR). The CBR was adjusted from 10.25% at the close of FY 2023/24 to 10.00% in August 2024, and further to 9.75% in October 2024, where it was maintained for the remainder of the financial year. This policy stance helped ease liquidity pressures and stimulate economic activity amid a favourable inflation outlook.The stability of the Uganda Shilling was another key factor in containing inflationary pressures. The Shilling appreciated by an average of 2.7% against the US dollar over FY 2024/25, supported by prudent monetary and fiscal policies, financial market reforms, and increased foreign exchange inflows from coffee exports, remittances, and NGOs.Looking ahead, the BoU projects core inflation to average between 4.5 and 5.0% in FY 2025/26, expecting it to return to the 5% target over the medium term. However, the forecast is subject to upside risks, including exchange rate depreciation, rising import costs due to trade barriers, increased government spending, and adverse weather conditions affecting food supply.The central bank remains committed to managing these risks proactively to uphold its primary mandate of promoting price stability, which is fundamental to fostering sustainable economic growth and socio-economic transformation.The post Bank Of Uganda Holds Inflation In Check, Averaging 3.5% Amid Global Uncertainties appeared first on The Insider.