Food prices rising ahead of festive season

Ubos’ CPI print of November 2023 shows that a household spent Shs35,752 on the same basket of goods. This works out to a marginal reduction of Shs1,263.

Yet in the grand scheme of things, and even by Ubos' admission, there has been a surge in the cost of growing vegetables and other traditional food crops, thanks to the recent rains.

The impact of the seasonal changes has left a dent in the pockets of many households. The price of maize flour, a staple for many, has soared from 3.2 percent in October 2023 to 5.3 percent in October 2024. Sugar also shot up by 2.2 percent during the same period.

Foodstuffs
The biggest increase during the aforesaid study period was registered by pineapples that shot up by 20.7 percent. Matooke, another staple for households, registered an increment that almost hit double digits. The Ubos CPI print for November 2024 captures a nine percent rise.

Hot on the heels of matooke are passion fruits, whose price swelled by 8.8 percent.

Dr Paddy Mugambe, a senior finance consultant at Uganda Management Institute (UMI), told Monitor that there are many factors that bring about the aforementioned general price increments.

“When you have disturbances in the Middle East and Russia, it contributes to the level of inflation at micro level,” he said, adding: “We are a connected kind of society. What is sold in Uganda is affected by whatever is happening in Ukraine, Russia, and other countries.”

The bad news, Dr Mugambe further noted, is that the high prices of commodities will persist until March 2025.

The country’s first harvest season, which typically plays out in March, is hoped to bring some kind of respite.

Dr Mugambe reckons some short-term measures can be taken to ease the pain. He, for instance, said the central bank can move to stabilize the production of food crops by increasing the money in circulation.

The annual food crops and related items index per Ubos’ latest CPI print is a mixed bag. It includes tomatoes at -14.2 percent, fresh leaf vegetables like bugga and nakati at 6.3 percent, carrots at -4.7 percent as well as 5.7 percent.

Cost of spoiling yourself
The Christmas and New Year's Day meals for families that opt not to dine out are usually ostentatious. Chicken and goat meat often tend to rank high on the pecking order of households with the wherewithal to spoil themselves.

A spot survey conducted by Monitor, however, shows that prices have shot up exponentially.

Mr Jimmy Nambafu, a poultry dealer in Mbale City, told us that the price of chicken (off-layer) has shot up from Shs15,000 to Shs25,000. The cost of a kilogramme of goat meat has gone up from Shs18,000 to between Shs22,000 and Shs25,000.

Mr Nambafu said a short supply of chicken has exacerbated matters. A live hen, he said, that used to cost Shs20,000 three weeks ago now goes for Shs35,000.

While people who sell chicken and goat meat are primed to smile to the bank this festive period, the same cannot be said of those who are part of the rice value chain.

“It is important to investigate why rice prices remain low even as rice farmers continue to voice their concerns about poor returns,” Mr David Mulabbi, the focal point officer of Uganda Speak Up Africa, said.

Last December, a kilogramme of rice traded at Shs4,000. This year, a kilogramme of kaiso rice goes for between Shs1,800 and Shs2,000.

“This is remarkably low, especially considering the energy and resources invested in rice farming. I’m wondering why the consumer price index for rice remains low,” Mr Mulabbi said.

Transportation
The festive period in Uganda is marked by many movements on the road. The CPI print for November 2024 puts passenger transport services at 3.8 percent. This is despite a year-on-year drop in the price of a litre of petrol on the one hand, as well as diesel, the most used fuel by passenger transport services, on the other hand.

Ubos’ datasets show that the price of a litre of diesel in November 2024 has dropped to Shs4,691 from Shs5,075 last November. A similar drop has been registered at the pump, with a litre of petrol now knocking back, on average, to Shs5,105.

“The fuel prices for this year have been relatively low since the government signed a fuel importation deal with Vitol, allowing Uganda National Oil Company to import petroleum products at cheaper prices,” Dr. Henry Buwule Musoke, a senior lecturer of accounting and finance at Ndejje University, noted, adding: “As such, transport costs are likely to reduce, leading to reduced commodity prices in the festive period.”

For food prices, Mr Musoke advised the government to continue investing in agriculture, including commercialized and mechanized farming. This, he reasons, will increase the scale of production across the country.

“This is why we are seeing Operation Wealth Creation that has enhanced agriculture in Uganda. Higher productivity implies increased farm yields, increased supply, and ultimately reduced prices,” he said.

“[The] government has subsidized the production of electric vehicles by creating substitutes for petroleum vehicles. This alone can contribute to a reduction in the general price level,” he added.

Cautious optimism
According to Ubos, the year-on-year inflation increased from 2.6 percent last November to 2.9 percent.

“We are currently having heavy rains in the country. This means people transporting their goods and services incur higher costs. The economic factors responsible for pushing prices higher are poor harvests occasioned by natural calamities across the country that have swept off roads, creating scarcity and hence money is chasing few goods,” Mr Steven Masiga, a researcher, opined.

Ms Mercy Akullo, a businesswoman, said this year's festive period is expected to be financially challenging. This, she added, is because many businesses are still grappling with the lingering effects of the Covid-19 pandemic.

“Some businesses have closed while others are struggling with reduced customer demand compared to pre-Covid times,” Akullo noted.