Your Salary Is Unchanged, But Your Shopping Basket Is Shrinking

By Joshua Kato, CA | Chartered Accountant & International Tax Advisor

From the fuel pump to the dinner plate, Uganda’s rising cost of living calls for smarter financial decisions at home.

I woke up this morning feeling financially stable until I stopped at a fuel station. One glance at the pump prices and I nearly asked the attendant whether financial counselling came free with petrol!

With petrol reportedly around Shs6,800 a litre and diesel approaching Shs7,000, filling a tank is beginning to look like a capital investment. Soon, we accountants may have to start recognising a full tank of fuel under property, plant and equipment, and depreciating it over its useful life!

Then I checked the dollar exchange rate. The dollar seemed to be running a marathon while the shilling struggled to catch its breath. Somewhere in Kampala, a shopper was probably entering a supermarket with Shs200,000 and leaving with two small bags and one very large disappointment.

Behind the humour lies a serious economic reality. The dollar has moved from the foreign exchange market into our fuel tanks, transport fares, shopping baskets and ultimately our pockets.

The question is no longer whether the rising dollar affects us, but how we respond when living costs increase while our salaries remain largely unchanged.

Uganda imports petroleum, machinery, medicines, industrial inputs and many consumer goods, often paying suppliers in US dollars. When the shilling weakens, importers need more shillings to buy the same goods.

For example, Valeria Nabakooza, an importer purchasing merchandise worth USD 10,000, pays Shs39 million at Shs3,900 per dollar but Shs42.5 million at Shs4,250. That is Shs3.5 million extra without buying a single additional item!

Businesses may absorb the additional cost, accept lower profits or increase prices.

And here is where accountants understand the real pain. The sales manager may be celebrating record revenues while the finance manager is quietly crying over foreign exchange losses. Same company, completely different emotional departments!

Fuel amplifies the problem. Farmers, manufacturers and traders all depend on transportation. When moving goods becomes more expensive, food prices can follow.

That is how an international oil-market disturbance eventually influences the cost of preparing dinner in a Ugandan home.

Even tomatoes are beginning to behave like luxury assets. Soon, we may need independent valuers before preparing supper!

Weekend outings, frequent food deliveries, unnecessary driving, imported groceries and entertainment subscriptions can quietly drain household budgets.

Some Ugandans are maintaining champagne lifestyles on mineral-water budgets. Unfortunately, even mineral water is becoming expensive!

When salaries remain unchanged while necessities cost more, purchasing power declines. Your employer may proudly announce that your salary has remained constant. Unfortunately, the supermarket and fuel station have effectively implemented their own salary-reduction programmes!

Of course, lower-income households already spend much of their earnings on necessities, leaving little luxury to eliminate. Their situation requires affordable essentials and improved incomes. But where discretionary spending exists, we must become more deliberate.

Maintaining yesterday’s lifestyle with today’s prices and yesterday’s salary is becoming financially unsustainable. Uganda does not determine international oil prices, global shipping costs or geopolitical developments.

External shocks influence fuel prices, import bills and demand for foreign currency. Domestic taxation, market conditions and economic policies also affect consumer prices.

On 14 October 2026, the Bank of Uganda raised its policy rate from 9.75% to 12% to contain inflationary and exchange-rate pressures. It also intervened in the foreign-exchange market on 22 October by selling dollars to ease volatility.

These measures are important but involve trade-offs. Higher interest rates can support monetary stability while increasing borrowing costs for businesses and households.

Government must continue promoting stability, fiscal discipline, domestic production and stronger exports.

But as the central bank works to stabilise the national economy, households must also stabilise their own finances.

What practical changes can you make to survive with the rising dollar at the moment?

First, rethink transport. Coordinate school runs, combine errands, share rides where practical and eliminate unnecessary journeys. A household spending Shs1 million monthly on fuel that reduces consumption by 15% saves approximately Shs150,000 monthly, assuming unchanged prices. That translates into Shs1.8 million annually!

Second, plan household food expenditure. Shop with a list, compare market prices, purchase affordable seasonal foods and minimise wastage. A disciplined kitchen can make a significant difference to household finances.

Third, reconsider luxury expenditure. Not every weekend requires an expensive outing, and not every invitation demands attendance. I recently suggested reducing unnecessary household spending. Unfortunately, my weekend nyama choma was immediately classified as non-essential expenditure. I have since appealed the decision!

Fourth, manage borrowing carefully. Review loan repayments, particularly variable-rate facilities, and avoid expensive borrowing for unnecessary consumption. Protect essential expenses and emergency savings.

Fifth, introduce monthly household financial reviews. Compare current food, fuel, utility and entertainment costs with those of previous months. Identify unnecessary expenses and establish realistic spending limits.

Businesses should similarly review procurement costs, selling prices, foreign currency liabilities and cash-flow forecasts.

And please, avoid buying dollars purely out of panic. Currency markets fluctuate, and speculative purchases can create further losses.

A colleague asked me, “Will the shilling weaken further?” In the short term, the Uganda shilling may remain under pressure as petroleum importers, manufacturers and traders continue demanding foreign currency. Global energy prices and geopolitical uncertainty present additional risks. Further depreciation is possible, although the Bank of Uganda’s monetary interventions, export earnings, remittances, tourism receipts and investment inflows could moderate the pressure or support temporary recovery. Currency movements are not one-directional, and predicting a specific future exchange rate would be speculative. Households and businesses should therefore prepare for continued volatility rather than assume the dollar will rise indefinitely.

The Bank of Uganda has its Monetary Policy Committee. Perhaps every Ugandan household now needs its own financial management committee! Someone must understand what comes in, what goes out, what should be saved and which expenditure can wait.

We cannot individually control international oil prices, geopolitical conflicts or the dollar exchange rate. But we can influence our spending habits, borrowing decisions, transport arrangements and household consumption.

Uganda must also strengthen domestic production, agricultural productivity and exports to improve its resilience against external economic shocks.

Ultimately, managing economic pressure requires responsibility at every level: government, businesses and individuals.

Government has a responsibility to safeguard economic stability, but individuals must also manage their limited resources wisely.

The Bank of Uganda has its monetary policy. Every Ugandan household must now develop its own spending policy!

And please, give your household Governor of Expenditure some real powers. Judging by how some of us are spending, the current fiscal controls are clearly not working!

Because sometimes, surviving a difficult economy is not simply about earning more money. It is about becoming wiser with the money we already earn.

The dollar has gone up. It is time to rethink how we spend!

The writer is a chartered accountant, economic policy analyst and a chartered tax advisor.

Tel: 0756-713-691 Email: kjoshuakato@gmail.com