PREDICTIONS COME THROUGH AS INFLATION HITS 30+ PERCENT
Ugandans will wake up to the stark reality that inflation has now gone above 30+ percent, the highest level since January 1993, when it had reached 34+ percent. With prices escalating literally by the day now, life is getting harder every month and incomes erode with no relief in sight as yet for ordinary Ugandans while the middle class is threatened with sliding back into the low income levels due to the higher cost of living like food, fuel and regular expenses like phone calls.
Concerted Central Bank action in recent days pushed the shilling values in the East African core countries of Uganda, Kenya and Tanzania up, against the trend, but these latest inflation figures will not help as hard currencies at present seem one of the few ways to secure the value of available cash reserves.
How therefore these latest inflation figures will influence the market will remain to be seen but companies which have to service loans or pay dividends to foreign shareholders will be quick to snap up the available dollars in the market at the presently improved values to take advantage of the sudden gains the three shilling currencies made, before an expected repeat slide would set them back a whole lot more.
The Bank of Uganda rate to banks now also stands at 20 percent which has led to a substantial loss of liquidity in the market while commercial banks and mortgage institutions have in turn increased their prime and regular lending rates, driving the cost of doing business up by making overdrafts cost up to 10 percent more than just a few months ago. Growth forecasts for Uganda have subsequently been revised from approximately 6.5 percent to 5.5 percent which will further influence the trend in months to come. The tongue in cheek advice of this correspondent: Should Christmas come early go grab it as otherwise, with these inflation figures, Christmas may not come at all this year. Watch this space.
