Uganda’s annual headline inflation rate for the year ending January 2012 dropped to 25.7 percent from 27.0 in December 2011, the third straight decline, the country’s statistics bureau said on Tuesday."The food inflation decreased to 27.3 percent for the year ending January 2012 from 34.6 percent registered in December 2011,” said Uganda’s Bureau of Statistics (UBOS) in statement issued in Kampala. The country headline inflation rate that peaked at 30.4 percent in October last year was driven higher by food and fuel prices. It prompted Bank of Uganda, the country’s central bank to increase its lending rate to 23 percent.The declines in food and fuel prices in the country have since helped bring down the annual headline inflation rate in the past three months. "On monthly basis, reduction in prices was recorded for matoke (green banana), sweet potatoes, tomatoes, pineapples and sugar. As a result the composite food group index dropped by 2.3 percent,” UBOS said in a statement.UBOS said the annual core rate of inflation, which excludes food crops, fuel, electricity and metered water, slowed to 28.1 percent from 29.2 percent in December. "The food crops registered an annual inflation rate of 13.7 percent for the year ending January 2012 compared to 20.4 percent registered for the year ended December 2011,” said UBOS in a statement.

The monthly headline index increased by 0.1 percent for the month of January compared to a 0.2 percent decline registered in December. "The monthly core index remained relatively stable in January 2012,” said UBOS.