By Samuel Sanya and Racael Nabisubi
Factory gate prices have fallen to negative 0.4% for the year ending August 2012 due to lower prices of metal products and chemicals to support the disinflation trend in Uganda’s economy.
The Producer Price Index fell from 7.9% for the year ending July 2012 despite increases in the prices of processed food, drinks, tobacco, bricks and cement.
“This was attributed to a general fall in steel prices in the world market following a demand crunch and competition with imported products,” said Imelda Atai Musana, the business and industry statistics director at the Uganda Bureau of Statistics (UBOS).
She told reporters at the Statistics house that a global fall in demand and production in larger economies such as Europe and China has seen an influx of lower priced imports, leading to a lower general price level at factories in Uganda.
“Goods produced for the local market were relatively cheaper in August 2012, compared to goods produced for export….local manufacturers cannot compete with cheap imports,” she explained.
Prices of metal products fell 1%, drinks and tobacco by 0.9% on the local market and 3.2% on the export market on an annual basis. Prices for processed coffee rose by 10.3% driving up the average prices of processed food to 2.3% for the year ending August 2012.
Peter Opio, a UBOS principal statistician, noted that construction sub-sector prices fell to 0.2% in the year ending August 2012 due to a decrease in wage rates and material input prices, especially for electrical wires and cables and steel bars and diesel.
“The prices of inputs for residential buildings and non-residential buildings decreased by 0.4% and 0.7% respectively in August due, to the decline in prices of timber, cement and electrical wires. This means that we are somehow getting better than the year 2011,” he said.
Opio noted that the use of export quota restrictions on Ugandan cement exports to South Sudan and the growing instability in Congo has affected production and supply.
Reports indicate that cement production fell to 146,000 metric tonnes in August this year, down from 157,000 metric tonnes in July 2012 and 158,000 metric tonnes in August 2011.
Samuel Echuko, a UBOS staffer, indicated that Uganda’s exports are likely to be affected by skirmishes in Congo and austerity measures imposed by the South Sudan government.
“South Sudan imposed austerity measures due to a shortage of dollars (in the period following a conflict with the north). Congo is having conflict, all this will affect our exports,” he said.