Cost of manufacturing goods, services reduces

By Samuel Sanya

High competition and falling costs have brought down the average cost of manufacturing in Uganda to -2.2% for the year ended December 2012, bringing down the price of goods and services for consumers.

Falling prices of sugar, metal products, processed food, drinks and tobacco have brought down the average cost of related products, supporting the drop in the consumer price index.

“The positive local and global outlook has reduced speculation in the setting of prices which was prevalent in 2011. Manufacturers are now setting prices based on fundamentals,” said Dick Wadada, a statistician at the Uganda Bureau Statistics (UBOS).

Though negative, the Producer Price Index for manufacturing for the three months ending December 2012, is a notch higher than the -4.1% for year ended November 2012.

Diana Byanjeru, a UBOS statistician for energy and infrastructure noted that construction prices have also dropped -1.1% due to reduced prices of timber, wage rates, electric wire and cables.

While manufacturing prices have dropped, prices for services in the hotel and restaurant industry rose 2.7% on average, due to the December festive season, buoyed by increased charges for accommodation and catering services.

Exchange rate disparities were also noted as one cause of the higher prices for the hospitality industry.

William Anguyo, a UBOS senior statistician, noted that higher supply of processed fish to markets and lower demand has greatly contributed to the fall in prices of processed foods. Food products account for 42% of the manufacturing price index.