EAC inflation eases but underlying pressures persist

EAST AFRICA: INFLATION across the East African Community (EAC) fell sharply in June, with annual headline inflation dropping to 7.8 from 22.7 per cent a year earlier, although rising core and food inflation pointed to persistent underlying price pressures.

According to the EAC Quarterly Statistics Bulletin, regional annual headline inflation declined from 11.1 per cent in April to 10.7 per cent in May before falling to 7.8 per cent in June.

On a month-on-month basis, the regional price index fell by 0.8 per cent in June, following a 1.2 per cent increase in May.

The decline in headline inflation, however, was accompanied by a rise in core inflation, which increased from 6.2 per cent in April to 6.4 per cent in May and 7.0 per cent in June.

Although well below the 19.3 per cent recorded in June 2025, the increase pointed to persistent underlying price pressures despite the sharp decline in headline inflation.

Food inflation also increased, reaching 10.1 per cent in June from 9.5 per cent in May, although it remained considerably below the 37.5 per cent recorded in June 2025.

This meant food prices continued to rise compared with a year earlier, but at a considerably slower rate.

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Inflation in energy, fuel and utilities eased to 11.1 per cent in June from 14.2 per cent in May.

However, it remained above the 6.3 per cent recorded in June 2025, indicating stronger annual price pressures in the category than a year earlier.

Tanzania recorded annual headline inflation of 4.0 per cent in June, below the regional rate of 7.8 per cent.

Uganda recorded the lowest rate among the partner states covered by the EAC-HCPI at 3.7 per cent, while Rwanda and South Sudan recorded the highest at 13.0 per cent each.

Burundi recorded 8.0 per cent and Kenya 6.5 per cent. South Sudan’s inflation rate fell from 23.1 per cent in May, while Rwanda’s remained unchanged at 13.0 per cent.

For the 2025/26 fiscal year, regional annual average headline inflation declined to 14.2 per cent from 23.0 per cent in 2024/25.

The Bulletin attributed the decline to lower inflation in South Sudan and Burundi, where annual average rates fell from 179.4 to 43.2 per cent and from 33.3 to 18.0 per cent, respectively.

The easing of inflation was accompanied by divergent movements in interest rates across the region during the second quarter.