Uganda’s economy continued to demonstrate resilience and steady expansion in May 2026, with key indicators pointing to sustained growth momentum despite rising inflationary pressures and a weakening local currency.
According to the latest Performance of the Economy Report for May 2026, high-frequency indicators remained positive throughout the month.
The Purchasing Managers’ Index (PMI), a key gauge of private sector activity, stood at 54.1, remaining above the 50.0 threshold that signals expansion in business activity.
The reading indicates that business conditions continued to improve, supported by stronger demand and increased economic activity.
Business confidence also strengthened during the month. The Business Tendency Index (BTI) rose to 56.7 in May from 55.2 in April, reflecting growing optimism among firms across most monitored sectors.
The report attributes the improved outlook largely to robust consumer demand, which continued to support business operations and sales.
However, inflation edged higher during the period. Annual headline inflation increased to 3.2 percent in May from 3.0 percent in April.
The rise was mainly driven by higher transport and energy costs following increases in domestic fuel prices. Despite the uptick, inflation remains below the government’s 5.0 percent target ceiling, suggesting that price pressures remain contained.
Meanwhile, the Uganda Shilling weakened slightly against the US Dollar, depreciating by 1.3 percent to an average midrate of Shs3,764.11 compared to Shs 3,716.70 in April.
The report notes that the depreciation was largely driven by increased demand for the dollar from traders financing higher energy imports and freight costs. Continued geopolitical tensions in the Middle East also contributed to foreign exchange demand pressures.
Despite these challenges, the overall economic outlook remains positive, with strong business activity and improving sentiment suggesting continued growth momentum.
Policymakers are expected to keep monitoring inflation trends, exchange rate movements and global developments that could influence stability in the coming months.