Inflation began rising sharply towards the end of 2010, as can be seen in figure 4. Initially this rise was driven by food price inflation. Food crop harvests were poor in Uganda and other parts of East Africa, while international world food prices were also pushed up steeply in the first half of 2011 by bad harvests in major cereal producers such as Russia.
As a result, annual food crop price inflation soured to a peak of 42 percent in Uganda in May and remained high for several months thereafter. This was a pure supply side shock to prices and had nothing to do with excess demand or to too much money chasing too few goods.