Inflation in manufacturing sector increases by 0.5%

A trader weighs sugar. Sugar prices registered a fall due to competition from new sugar factories. PHOTO BY ABUBAKER LOBOWA

Kampala- The manufacturing sector has experienced a marginal rise in inflation by 0.5 per cent, according to figures from the Uganda Bureau of Statistics (Ubos).
This implies that Ugandans paid slightly more for manufactured goods in the last 12 months ending September 2013, compared to the same period last year.

The Producer Price Index for Manufacturing (PPI-M) released yesterday indicates that producer prices for manufactured goods increased by 0.5 per cent during the period.

Mr William Anguyo, the principal statistician in charge of Business and Industry Statistics, Ubos, said chemical products, textiles, clothing and footwear also registered a surge in prices driven mainly by soap products and an increase in prices of raw materials, respectively.

The lower inflation registered in the manufacturing sector further affirms that Uganda’s economy is stabilising from the effects of the 2011 high inflation rates, which almost crippled the economy.

Although the increase in inflation means that manufacturers registered an increase in production costs, the rate of increase was slightly lower than the 3.3 per cent increase in factory gate prices recorded in August this year.

The sector last year grew by 5.6 per cent in 2012/13 financial year, showing a strong recovery from the -0.3 per cent growth rate posted in 2011/12, according to Ubos’ recently revised economic growth figures. During the period, however, price decreases were registered for processed foods supported by a 17.1 per cent fall in sugar prices due to competition to retain market share as new sugar factories came on board.

For instance, Kaliro Sugar Factory started operations which increased sugar supply, thus a fall in sugar prices from about Shs4,000 last September to Shs3,000 today.
The fall in the exchange rate also resulted in a fall in prices of processed coffee and processed tea, according to Mr Anguyo. He, however, noted that the stability of local currency, which has averaged Shs2,560 per dollar since June this year has affected the value of Uganda’s exports.

Meanwhile, the construction sector posted a decrease in inflation by 8.7 per cent during the period under review due to decreases in prices of inputs such as cement, iron sheets bricks, diesel and wages among others.

Mr John Bonaventure Musoke, the senior statistician Ubos, attached the fall in prices of bricks and cement to competition from imported cement, in addition to a slowdown in construction activities.

The construction sector grew by 7.5 per cent in 2012/13 financial year compared to a 3.2 per cent slowdown posted in 2011/12.