Food wipes 40% off household incomes

A new report by the parliamentary Committee on the National Economy has revealed that households in Uganda spend up to 40 percent of their resources on food.

The report states in no uncertain terms that rising commodity prices have made “the poor even poorer”, adding that households spend 18.2 percent of their resources on housing, electricity, gas and other fuels.

The revelations come as the Uganda Bureau of Statistics (Ubos) latest consumer price index (CPI) indicates that consumers forked out more for everything from fuel to food in August.

Transport costs alone increased by 8.7 percent as the price of fuel rose to record levels (petrol inflation at 59.4 percent and diesel inflation at 69.7 percent).

Annual food crops and related items inflation also rose a little over 18 percent from a year earlier.

Matooke inflation (62.4 percent), beans inflation (27 percent), fresh cassava (26.4 percent), fresh milk (15.8 percent), cabbage (25.3 percent) and watermelon (6.5 percent) all rose, prompted in part by shortages caused by extreme weather.

Data released on Wednesday showed that annual headline inflation reached nine percent in August, up from 7.9 percent registered in July due to increases in prices of food and other commodities.

Core inflation, which excludes volatile commodities such as fuel, increased to 7.2 percent from 6.3 percent registered in the year ended July. This has stoked expectations of another rate hike when Bank of Uganda’s Monetary Policy Committee next meets. The central bank’s policy rate currently stands at nine percent.

Cost of living squeeze

The cost of living squeeze was also captured in the Committee on the National Economy’s report on the performance of the economy as at June 2022, painting a bleak state of affairs.

Based on hard information from the National Planning Authority (NPA) and Ubos, the report captures a 57.3 percent increment in the price of cooking oil between April 2021 and April 2022. The national average cost of a litre of cooking oil in April 2021 was Shs7,065, but had risen to Shs11,110 in April 2022.

A bar of laundry soap that cost Shs3,864 in April 2021 spiked to Shs7,798 a year later—an eye-watering increase of 101.8 per cent.

The petrol price surged by 35.10 percent between April 2021 and April 2022 from Shs3,856 to Shs5,209. Currently, a litre of petrol retails at an average of Shs6,563 as per Ubos’s latest CPI. The price of diesel has also been increasing from an average of Shs3,423 in April 2021 to Shs4,704 in April 2022. It then jumped to Shs6,096 in July and the latest CPI places it at an average of Shs6,192.

The average price of paraffin, also known as kerosene, which is used for lighting by the poor, has increased by more than Shs1,000 from Shs3,105 to Shs4,640.

In May, President Museveni advised Ugandans to eat cassava as an alternative to bread, whose price has been increasing due to disruptions in wheat supply. Ubos’s latest CPI, however, shows that cassava has not been spared by inflationary pressures.  The price of a kilogramme of fresh cassava increased from Shs683 in August 2021 to Shs827 in July and currently sells at an average of Shs914. In the same vein, the price of a kilogramme of sweet potatoes increased from Shs968 to Shs1,183 in August 2022.

Just last August, annual headline inflation stood at 1.9 percent. It has now experienced an almost fivefold increase. The implication of this is that a person gets less commodities for the same amount of money used a year ago. The central bank has vowed to remain hawkish until it “contain[s] inflation around the five percent target.”

It has, however, admitted to powerlessness since Uganda is experiencing cost-push inflation. Ubos’s latest CPI, for instance, has attributed the rise in inflation to transport, food and related items, electricity, fuel and utilities. For instance, the inflation of vegetables, tubers, plantains and cooking bananas rose to 25.3 percent in August 2022 from 23.7 percent a month before, in July.

Posho and beans

The price of maize flour has skyrocketed from a national average of Shs1,955 per kilogramme in August 2021 to Shs3,421 in August 2022.

The price of a kilogramme of dry beans has increased from an average of Shs2,719 to Shs3,805 in August 2022. Maize flour and dry beans are staples for the vast bulk of schools that dot Uganda. The increments in their retail prices has already translated into a hike in school fees.

In its report, the Committee on the National Economy—which has a mandate to review, consider and scrutinise all matters relating to the national economy—expresses worry over the rise in some individual commodities.