Uganda's inflation drops to 5.7% in July

Uganda's headline inflation dropped to 5.7% in July from 6.4% in June, marking a positive trend in the country's economic landscape. This decrease was attributed to a month-on-month easing in vegetable prices, contributing to the decline in inflation rates. Additionally, core inflation also saw a decrease to 4.5% during the same period, down from 4.9%. These figures indicate a stabilizing economy and potentially positive outcomes for Uganda's financial markets. Catherine Namujjuzi, the Risk and Compliance Manager at Crested Capital, offered insights into the recent inflation figures and shared her views on the coordination between the Uganda Bureau of Statistics and the Central Bank in inflation targeting. Namujjuzi highlighted the importance of collaboration between the two entities and expressed optimism about the alignment of inflation information provided by both institutions. She noted a positive trajectory in economic growth, supported by consistent performance over the past three months. Addressing the impact of election years on inflation, Namujjuzi emphasized the government's improved preparation and management strategies during election cycles. She credited the infrastructure and development initiatives for absorbing funds effectively, thus preventing inflation spikes. With ongoing projects like the Rasezi Dam, Standard Gauge Railway (SGR), and Karuma Dam, which involve significant equipment imports, Namujjuzi discussed the government's efforts to mitigate imported inflation by promoting local content and engaging local suppliers and human resources. The discussion shifted to the equity market, notably focusing on Stanbic Bank's performance and upcoming earnings expectations. Namujjuzi expressed positivity about the bank's financial outlook based on previous performance indicators and the recent reduction in the prime lending rate. She anticipated improved results for Stanbic Bank and emphasized the significance of earnings releases in driving market sentiment. Looking at other market counters, Namujjuzi highlighted Stanbic and Umeme as dominant players with significant market activity. She underscored the importance of interim dividends and tariff plan adjustments in shaping financial performance and investor perceptions. Beyond these counters, she pointed out British-American Tobacco Uganda's profit decline of 52.1% and discussed the regulatory challenges impacting the company's valuation and trade volume. Regarding British-American Tobacco's listing on different exchanges, Namujjuzi clarified that the stocks in Uganda and Arabica were distinct entities, emphasizing the implications of production shifts and illicit trading dynamics. She provided clarity on the market nuances and emphasized the need for independent evaluations of the company's performance. In conclusion, Namujjuzi's insights shed light on Uganda's evolving economic landscape, highlighting the importance of data-driven analysis, regulatory considerations, and market dynamics in shaping investor decisions and economic outcomes.