Uganda inflation at 6-yr low in Aug at 1.7 pct y/y

KAMPALA, (Reuters)

Uganda's year-on-year headline inflation rate UGCPIYECI eased to a 6-year low of 1.7 percent in August from 3.2 percent in July, the Uganda Bureau of Statistics (UBS) said on Tuesday.

Falling food costs year-on-year helped bring the overall reading to its lowest since July 2004 and the core inflation rate also eased to 4.0 percent in August compared with 4.6 percent in July.

"Increases in prices of petrol, paraffin, charcoal and firewood were recorded in most centres. Likewise, price increases were recorded for some household and personal goods and second hand clothes," the statistics bureau said in a statement.

The "food prices index decreased by 5.5 percent for the year ending August 2010 compared with a decrease of 0.4 percent registered for the year ended July 2010."

However, the food prices index rose 0.8 percent on the month.

Inflation in Uganda, which is expected to start commercial oil production next year, has declined most of this year due to good food harvests.

But analysts expect the inflation rate to pick up again in coming months.

"Usually prices will tend to rise during planting and before harvest basically because the country is using up its food stocks," said Bill Page, a partner with Deloitte & Touche in Uganda.

"I think we'll see inflation go upward gradually over the next few months as planting starts and then all the way to around December when harvest begins."