The determinants of inflation in Uganda

Abstract

The study intended to extend the discussion of the determinants of inflation in Uganda – an assertion that there is positive long run relationship of inflation and Macro and Micro Monetised Policies as Key determinants of consumer price changes. This follows not only the perpetual surge in inflation that hampered inclusive growth in the previous decades in Uganda, but also the inconclusiveness, and mixed findings, which characterize the available scholarly evidence regarding the key determinants of inflation in Uganda. Annual time series data from 1989 to 2019 from WDI database of the World Bank, and Bank of Uganda was used to test for the validity of this relationship. Utilizing the ARDL modelling techniques coupled with its associated ARDL bounds test for cointegration, this study’s key findings, this study recommends that Bank of Uganda, Government and Development partners should enhance more contractionary monetary policies, more support to indigenous investors, pursuing low and stable interest rates to attain macroeconomic stability.