High import costs push price index up by 10%

Roofings Group chairman Sikander Lalani explains how iron sheets are manufactured at the factory in Namanve, Waksio District. High cost of imported raw materials has hiked prices of manufactured goods. PHOTO BY RACHEL MABALA

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Factors. Inflation and currency depreciation have also been blamed on the hike.

Kampala. High cost of imported raw materials, coupled with expensive loans, have significantly pushed up the prices of manufactured goods in the country over the last one year.
Accordingly, Uganda Bureau of Statistics (Ubos) said the Producer Price Index (PPI) for manufactured goods increased by 10.5 per cent for the year ending August 2015 compared to 8.1 per cent for the year ended July 2015.
This, the statistics body said, signifies the fact that the general public has had to pay more on the same goods than they were paying a year earlier.

PPI for manufacturing is a measure of change in the prices of goods either as they leave their place of production or as they enter the production process.
In an interview with Daily Monitor after the release of PPI last week, Uganda Manufacturers Association executive director Mustapha Kigozi Sebaggala also blamed the high interest charged on loans.

“The cost of production has gone up in Uganda because of high cost of imported raw materials, high interest on commercial loans charged by the commercial banks due to high Central Bank Rate (CBR) of 16 per cent, so the manufactures are getting the money at higher cost which translates into high cost of production and consequently high prices for the manufactured goods,” he said.
Mr Sebaggala added: “The manufactures are also faced with the high electricity charges, electricity is one of the main drivers of manufacturing so when the electricity tariff are high automatically cost of production for the manufactures also goes up.”

He said costs of production and prices of goods are getting higher because of depreciation of the Shilling which has depreciated from Shs2,500 per dollar a year to now Shs3,700 per dollar.
Private Sector Foundation Uganda executive director Gideon Badagawa said the cost of production in Uganda is due to high inflation rate and currency depreciation.
“When cost of production is high, it means that Uganda is not competitive so we are losing out to other countries where cost of production is not as,” he said.

Price rise of processed foods

While releasing the PPI for August, Ubos principal statistician William Anguyo said the main drivers to a 10.5 per cent were as a result of rise in processed food prices by 12 per cent.
According to him, sugar prices increased by 27.1 per cent, processed coffee by 14.1 per cent and vegetable oil by 16.4 per cent due to increased cost of production attributed to increased cost of raw materials. “Drinks and tobacco products by 9.2 per cent due to a rise in prices of malt liquor and soft drinks by 14.5 per cent and 16.8 per cent, bricks and cement by 14.3 per cent mainly due to a rise in prices of cement by 16.1 per cent attributed to increased cost of production, metal products by 5.6 per cent mainly due to a rise in prices of structural metals by 9.8 per cent and basic iron and steel by 11.4 per cent as a result of increased cost of imported raw materials,” Mr Anguyo said.
He added: “Prices of goods produced for exports registered an increase of 2.9 per cent following a previous rise of 1.7 per cent in July 2015.”

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