Using repeated cross-sectional household survey data, this paper reveals that Uganda sustained the growth in improvements in average living standards during the last decade albeit with persistent regional disparities. In the recent past, the national poverty significantly declined from 24.5 percent in 2009/10 to 20.7 percent in 2012/13, driven mainly by improvements in the distribution of income rather than the increase in the average living standards. Despite progress in welfare improvement at national level, poverty reduction remained unchanged in the lagging areas—notably Northern and Eastern Uganda; and growing in urban areas. In terms of income distribution, the rising inequality since 2002/3 was interrupted by significant improvements in the distribution of incomes between 2009/10 to 2012/13. Indeed, the growth in this period benefitted the poor. From a policy perspective Uganda suffers from a twin problem of sustaining growth as well as maintaining the poverty reduction momentum. Poverty reduction was significant in the leading regions and remained unchanged in the lagging ones. Accordingly, the progress in poverty reduction continues to widen and the tendencies towards higher inequality seem to undermine the rise in the average living standards. The failure to sustain growth in the lagging regions amidst several government anti-poverty interventions raises policy challenges.