construction

Processed goods’ prices increase, while construction declines

By Edwin Muhumuza

Prices for manufactured goods and utilities such as water and electricity increased by 2.0% compared to 3.2 % in the months of August and July respectively.

While releasing the quarterly producer price indices for the manufacturing and utilities sub sectors at the Uganda Bureau of Statistics, Principal Statistician, James Ambayo, noted that the main drivers to the rise in prices of manufactured products is the rise in food product prices.

Others that registered an increase in prices include tea which shot up by 11.6 %, a trend attributed to less competition and high demand for tea leaves hence making the Ugandan suppliers-price makers at the auction market.

‘The increase is as a result of the rise in the cost of raw materials used in the manufacturing sector ‘Ambayo said.

On the other hand, In the Utilities sector, the main drivers to the 1.4% decrease was that the electricity power generation costs were affected by the appreciation of the shilling.

Relatedly, price increments of animal and vegetable oils have been attributed to increase in operational costs especially transportation costs for imported raw materials.

On a monthly basis, producer prices for manufacturing sector in the export market have decreased by 4.2% driven by a decrease in export prices of processed food products by 5.3% in August and this is attributed to reduction in prices of processed coffee, and fish.

‘The export price reduction of the items was as a result of a high supply of processed coffee and a high supply of fish catch, yet the demand remained constant for both products at regional and international market ’he remarked.

In the construction sector, the average annual input prices for the whole sector, covering material prices, wage rates and equipment hire rates have decreased by 2.85% in August and 3.12% in July.

According to the Uganda Bureau of Statistics, principal statistician, William Anguyo while releasing the sector indices, the main contributors to the annual decease in input prices were a decrease in input prices for all buildings, driven by a fall of 1.37% and 2.3% input prices for non-residential buildings and residential buildings respectively.

Additionally a reduction of 7.44% input prices for civil works affected the sector.

However on a month to month basis prices of inputs into the whole construction sector registered an increase of 0.07 % in the month of August compared to a 0.01% increase registered for the month of July.

It is also important to note that prices of Iron and steel, roofing sheets and lime went down in August by 0.34%, 0.96% and 2.54% respectively.

The price of cement in Uganda has gone down with the entry of Simba Cement (National Cement – Devki Group) and Kampala Cement. While Hima Cement (LafargeHolcim) and Tororo Cement remain the dominant players, competition has been accelerated by the Ministry of Trade, Industry and Co-operatives’ measures to fast-track licensing of new cement manufacturers.

The drop in prices has been long coming following drastic measures by Ministry of Trade, Industry and Co-operatives to fast-track licensing of new cement manufacturers. Removal of 10% import duty on clinker has also lowered production costs.

However, in light of that, The Uganda Bureau of Statistics notes that the Net Domestic Supply of Cement has decreased by 2.99% in August compared to July 2020 due to a decrease in local production following the reduction of workers at cement factories due to Covid19 restrictions.

Relatedly, there was an observed decrease in cement exports and an increase in imports.

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