Preliminary data from the Uganda Bureau of Statistics (UBOS) reveals that the size of Uganda’s economy expanded to sh226.344 trillion in the fiscal year 2024/25, up from sh203.708 trillion recorded in 2023/24.
Real Gross Domestic Product (GDP) growth accelerated to 6.3%, compared to 6.1% in the previous fiscal year, signaling a modest but firm uptick in economic momentum.
This growth surge was principally driven by increased aggregate demand, higher investment levels, and stronger export performance. The government’s ongoing strategic initiatives aimed at stimulating private sector development also played a crucial role in bolstering the economy.
All major sectors posted positive growth in FY2024/25 relative to the prior year. The agriculture, forestry, and fishing sector registered a robust growth rate of 6.6%, up from 5.6%, and accounted for 26.2% of GDP.
The industrial sector expanded by 7.0%, rising from 5.5%, contributing 24.5% to the overall economy. Conversely, the services sector recorded a more modest growth of 5.4%, down from 6.4%, yet remained the largest contributor to GDP at 41.9%.
Inflation Edges Up Amid Rising Food Prices
Turning to price dynamics, annual headline inflation rose slightly to 3.8% in May 2025, compared to 3.5% in April. This increase was largely fueled by a rise in annual core inflation, which climbed to 4.2% from 3.9% the previous month.
The inflationary pressure was notably evident in the food crops and related items category, where prices jumped to 4.3%, up from 2.4% in April. Meanwhile, the energy, fuel, and utilities sector experienced deflation, registering a decline of 0.9% over the year ending May.
More detailed price movements showed that core inflation increases were propelled by substantial price rises in key food staples and commodities. For instance, beef prices surged by 16.3% in May from 10.1% in April, maize flour increased by 7.4% from a marginal 0.2%, fresh tilapia rose by 16.5% compared to 11.6%, fresh Nile perch went up by 6.9% from 3.1%, and smoked Nile perch increased by 16.6% against 11.3% the month before.
In contrast, inflation within the services sector eased to 4.7% from 5.0% in April. This moderation was mainly attributed to a significant drop in passenger transport inflation, particularly for air travel, which recorded a deflation of -4.3% in the year to May compared to an inflation of 1.5% in the year to April. The reduced cost of both domestic and international flights in May contributed to this downward trend.
Annual inflation for food crops and related items also saw marked increases driven by price hikes in specific commodities. Cooking bananas (matooke) prices jumped by 29.8%, sweet potatoes rose by 27.8%, groundnuts (un-pounded) went up by 9.9%, pineapples increased by 16.0%, and pumpkin prices surged by 28.4% in May, compared to relatively lower or even negative inflation rates in April.
Energy and Fuel Prices Continue to Decline
Conversely, the energy, fuel, and utilities segment continued to experience price declines, with liquefied gas and paraffin prices falling by 6.4% and 4.0%, respectively. Diesel and petrol prices also continued their downward trajectory, recording decreases of 6.0% and 7.7%, although these were slightly less steep compared to reductions of 8.1% and 8.6% in April.
Economic Activity Indicators Signal Expansion
High-frequency economic indicators further confirmed the upward trajectory in economic activity during May 2025. The Composite Index of Economic Activity (CIEA) rose to 174.35 in April, from 171.93 in March, reflecting output gains across multiple sectors, including agriculture, industry, construction, wholesale, retail, and services.
Private sector activity remained robust, with the Purchasing Manager’s Index (PMI) sustaining an expansionary position above the 50 threshold for the fourth consecutive month. The PMI increased to 56.4 in May from 55.3 in April, driven by higher output and new orders amid strengthening consumer demand. Employment growth also persisted for the fourth straight month as businesses ramped up staffing to meet the sustained demand. Despite higher input costs, particularly for cement, soap, and foodstuffs, firms expanded production and sales across all monitored sectors.
Positive Business Sentiment Sustains Momentum
Business sentiment remained broadly positive, with the Business Tendency Index (BTI) holding steady above the critical 50-mark, registering 59.02 in May compared to 59.44 in April. The sustained optimism among private sector players reflected confidence in current and near-future business conditions, buoyed by steady demand and order inflows throughout the fiscal year.
Outlook: Balanced Growth Amid Inflationary Pressures
Overall, the economic data for FY2024/25 suggests a solid foundation for continued growth, though moderate inflationary pressures, especially in food prices, pose challenges that policymakers will need to monitor closely. The performance signals resilience amid global uncertainties and domestic price dynamics, with the private sector playing a pivotal role in sustaining economic expansion.
