Prolonged drought: the genesis of high commodity prices

By Stephen Ssenkaaba

Prolonged drought and subsequent poor harvests pushed up the prices for scarce food items.

According to the Uganda Bureau of Statistics, the rate of inflation soared from 28.3% in September to 30.5% last month. This trend has significantly affected ordinary Ugandans.

In economic terms inflation is the rise in the general level of prices of goods and services over a period of time. It also reflects a steady decline in the purchasing power of money, leading to a loss of real value in the internal medium of exchange and unit of account in the economy. 

Single mother Jennifer Namunu (not her real name) no longer buys sugar for her family of two children. She says it has become too expensive for her considering her meagre salary. She is the bread winner at home, so she has to buy food, pay school fees for her children and sustain the household. 

A kilo of sugar that once cost sh 2,800 now sells for sh 4,500 to sh5,500, meaning that Namunu today would have to pay nearly twice as much as she did this time last year. 

“We buy a lot less food these days. We have stopped eating meat, matooke and other high-priced kinds of food.”

According to a recent market survey, food prices have shot up since January when commodity prices went haywire. A bunch of matooke (green bananas) that cost sh7000-8000 in January now costs sh15,000. The price for rice also rose from sh2000 to 3,500. High fuel prices have also affected transport.

Rising cost of food has been a major driver for inflation in the country. According to Eliot Mwebya, Bank of Uganda’s director of communication, the long drought and subsequent poor harvests pushed up the prices for scarce food materials. “Such price hikes affected people’s purchasing power,” he says.

Production costs were also affected while interest rates in banks increased making it more costly for people to borrow. The exchange rate depreciation has not helped matters and as the global economy continues to struggle, things continually look uncertain. 

Such a situation calls for careful spending and what Mwebya calls ‘prioritising’ and a more frugal lifestyle. It means cutting costs on leisure and consecrating on food, water and transport. The Bank of Uganda says things are looking up. The shilling has gained nearly by sh300 and the Euro debt crisis is trying to find its feet. 

The food prices are also reducing albeit slowly. Despite this glimmer of hope, there remains some shadow of doubt. With a recent poll of U reporters in the country showing that most of them-70.5% don’t think the current prices of food, fuel and sugar will reduce soon, more needs to be done.