Inflation dynamics and trade balances across the East African Community (EAC) partner states exhibited contrasting patterns in May 2025, reflecting varied economic pressures within the regional bloc.
According to data from the Ministry of Finance and regional economic reports, headline inflation increased in Uganda and Rwanda, remained stable in Tanzania, while Kenya and Burundi reported divergent trends. Meanwhile, exchange rate movements and intra-EAC trade flows continued to shape the region’s economic outlook.
Rising Prices in Rwanda and Burundi Contrast Kenya’s Moderate Inflation
In Uganda, annual headline inflation inched higher in May 2025, mirroring a regional trend of rising consumer prices in several partner states. Rwanda experienced a notable rise in its inflation rate, reaching 7.7% in May, up from 6.6% in the prior month.
This surge was largely driven by increased prices in food and non-alcoholic beverages, housing and utilities, as well as transportation costs. Similarly, Burundi’s annual inflation rate accelerated sharply to 45.5% in April 2025 from 41% in March, largely due to persistent food price pressures.
In contrast, Kenya recorded a decline in annual inflation to 3.8% in May from 4.1% the previous month. This easing was mainly attributed to a slowdown in food prices, particularly staples such as Irish potatoes, oranges, and fresh packaged cow milk.
Tanzania’s inflation rate held steady at 3.2%, the same level recorded in April, indicating relative price stability within its borders during the month.
Currency Movements Show Mixed Fortunes Within the Region
Exchange rate movements within the EAC region reflected mixed fortunes for the respective currencies against the US Dollar.
The Ugandan Shilling appreciated by 0.4% in May 2025, while the Kenyan Shilling gained marginally by 0.2%. These gains suggest some strengthening in these countries’ external positions or improved confidence in their local economies.
However, the Tanzanian Shilling, Burundi Franc, and Rwanda Franc all depreciated against the dollar by 0.7%, 0.2%, and 0.2%, respectively, indicating varying degrees of external pressures and currency market volatility across the region.
Uganda’s Trade Deficit Narrows in April 2025 on Export Gains
Trade data for April 2025 showed that Uganda’s trade deficit with the EAC partner states narrowed to $127.05 million (sh469.69 billion), improving from a wider deficit of $152.97 million (sh566.29 billion) recorded in March.
This improvement was primarily driven by a sharp 49.6% increase in Uganda’s exports to the region, which rose from $180.78 million (sh668.89 billion) in March to $270.40 million (sh1.0 trillion) in April. This growth in exports more than offset a 19.1% increase in imports from EAC countries, which rose from $333.75 million (sh1.23 trillion) to $397.46 million (sh1.47 trillion) over the same period.
Country-Specific Trade Balances Highlight Both Surpluses and Deficits
Breaking down trade by country, Uganda maintained a trade surplus with several partners including the Democratic Republic of Congo (DRC), South Sudan, Rwanda, and Burundi, registering surpluses of $76.80 million (sh284.16 billion), $55.71 million (sh206.13 billion), $35.45 million (sh131.17 billion), and $5.44 million (sh20.13 billion) respectively. Conversely, Uganda continued to run significant trade deficits with Tanzania and Kenya, amounting to $231.91 million (sh858.07 billion) and $68.54 million (sh253.60 billion) respectively.
Year-on-Year Trade Deficit Worsens Amid Rising Imports
A year-on-year comparison reveals a widening trade deficit with the EAC region. Uganda’s trade deficit grew from $53.43 million (sh197.79 billion) in April 2024 to $127.05 million (sh469.69 billion) in April 2025.
This deterioration stems from a substantial 52.0% increase in the import bill, which rose from $261.48 million (sh967.48 billion) to $397.46 million (sh1.47 trillion). This outpaced a 30.0% increase in exports, which climbed from $208.05 million (sh769.79 billion) to $270.40 million (sh1.0 trillion) over the same period.
The growing import bill highlights Uganda’s increasing dependence on goods from regional partners, potentially raising concerns about trade imbalances and their implications for the country’s foreign exchange reserves and industrial competitiveness.