Weak shilling increases costs in construction and manufacturing sectors

Weak shilling increases costs in construction and manufacturing sectors

Weak shilling increases costs in construction and manufacturing sector: The continued depreciation of the Ugandan shilling against the United States Dollar has pushed up the prices   for construction and manufacturing sectors, a new report from the Uganda Bureau of statistics has revealed.

According to the  Construction  Sector Indices report from UBOS it shows that  the average  input  prices  at  the whole construction sector  increased  by 2.6% for the year  ending  June 2018 compared to  1.1% increase  for the year ended  June 2017.

The main contributors to the 2.6% increment were due to the increase of 3.0% in prices for residential building and 1.3% for nonresidential buildings.

“Under the review period, we saw the cost in the construction sector moving up, this was due to the increase in the cost of imported inputs such as diesel, steel bars, electrical wires. Yet our currency was not strong against the dollar during the period. This forced the cost to go up in the construction sector” explained Irene Musitwa a statistician at UBOS.

According to the report,the cost of diesel increased by 24.0 % due to forex rates  and that of  steel and bars also went up by  4.8% due to the price. Prices for electrical conductors also rose by 5.5% due to dollar strength of the dollar against the shilling.

The Producer Price Index also showed that manufactured goods and Utility prices also went up in the country. William Anguyo, the Principle Statistician Business and Industry statistics  said the  producer  prices  for manufactured  goods  and Utilities  increased  by 1.5% during  the year  ending  June 2018 compared to -0.8 recorded  for the year ended  May 2018.

The driver for the 1.5% increment was as result of 1.1% increase in prices for manufactured products and 5.5% registered increment in prices for Utilities.

The 1.1%increment in prices for manufactured products was due to  increases in the prices for  Chemical products,  Beverage prices which shoot up  by 1.9% in June 2018 driven by  a rise in prices  of spirits which was attributed to the cost  of raw  materials  which is mostly imported into the country.

The country also registered an increment in the prices for Pharmaceutical whose prices rose by 10.7% in June 2018.

Similarly a 5.5% rise on utilities was due to the rise in prices for electricity power generation subsector whose price rose by 7.7% which is attributed to the depreciation of the shillings.