Construction prices down

Construction prices have fallen to 0.3% for the month ended September 2016, due to decrease in prices of iron and steel, lime and bitumen to support disinflation trend in the economy.

The Producer Price Index (PPI-M) fell from 0.5% for the month ended August despite the increase in prices of diesel by 0.5%, roofing sheets by 0.1% and equipment hire out charges.

"There was an oversupply of bitumen as compared to its demand hence leading to the decrease in its price," said Dick Wanasolo Wadada Senior Statistician at the Uganda Bureau of Statistics (UBOS).

He said that there were mixed trends in prices of most products in September 2016 compared to August 2016 with some inputs increasing and others decreasing.

Construction Sector Indices (CSI) released by the Uganda Bureau of Statistics (UBOS) last week, indicate that prices of construction materials reduced.

However, on CSI annual price changes increased to 0.8% for the month of September 2016 compared to 2.8% recorded in September 2015.

"There was an increase in average prices for residential buildings due to the rise  in prices of wages as a result of increased cost of production, cement rose by 1.8% due to increased cost of production, PVC pipes and water tank prices too rose as a result of increased  cost of production,"  Wadada said.

He added that the net domestic supply of cement decreased in cement importation as well as its production; hence contributing to a fall in cement exportation.

"Cement quantities being produced locally dropped due to the decrease importation and flooding of the market," Wadada noted.

Simon Ssekankya the managing director of Hardware world, attributed the fall in cement prices to internal competition among seller.

"Internal competition among sellers who preferred to increase on their sales resorted to cost cutting. This further forced them to cut their prices," Ssekankya said.

In September, a bag of cement from various hardware dealers, sold between sh29,000 and 29,500. As of Thursday, it cost between sh31,000 and sh34,000.

Ssekankya explained that the due to cut-throat competition amongst the manufacturers, the market forces compelled dealers to cut their prices to the economy.

"Uganda's economy is very tight. Businesses are not booming and people are making lower sales than expected," he added.

He concurred that iron sheet and paint prices also fell as a result of the on-going campaign by Roofing and the increased demand for paint because of the Sadolin paint promotion.

Ssekankya was quick to note that since the festive season is around the corner, there is prospect that imported goods will increase irrespective of the status on the market or in case the shilling continues to depreciate.

"If the dollar continues to soar, prices of construction materials such as cement and steel will rise too," he added.

Evelyn Nantume a hardware dealer along hardware city noted that although the prices have slightly decreased, customers are very few.

"The status of the country is highly affecting their business and yet the landlords continuously demand for their rent," Nantume lamented.

She attributed it to the tax incentives given to investors who continuously sell their products at cheaper prices compared to their prices.

Indices for manufacturers

The producer price indices indicate that prices for manufacturing goods increased by 0.4% on increased price of sugar due to increased price of sugarcane, processed tea and coffee.

William Anguyo, the Principle Statistician Business and Industry at UBOS said the rise was as a result of increased demand for African coffee on the international market and depreciation of the shilling.

When asked why the price of sugar had increased, Anguyo said the cost of living has gone up and the amount of money manufacturers are giving farmers is not worth it.

"Manufacturers are buying sugar cane from farmers at a high price leading to an increase in its price," Anguyo said.

The annual price of sugar went up by11.1% and 2.1% on monthly basis.It now costs between sh3400-4000 to buy a kilogram of sugar.