Kasaija: "Rise in commodity prices in Uganda still much lower than elsewhere in the world"

The minister for Finance, Matia Kasaija, has said that there is no reason for alarm over rise in commodity prices here, saying that the increase is still much lower than elsewhere in the world.

Kasaija said that the rise in prices is not limited to Uganda, and urged the public to stay calm.

The minister made these remarks while briefing the media about the rising prices of essential commodities in the country.

"The rise in prices in Uganda is much lower compared with current global trends. Inflation has risen everywhere in the world including advanced nations, for example inflation in US accelerated to 7.9% in Feb.2022, the highest they have recorded in 40 years," Kasaija said.

He said that the effect of Covid-19 restrictions across the world disrupted supply chains leading to high transport costs and shortage of intermediate raw materials used to produce items such as soap and cooking oil.

"The full opening of economies has led to rise in aggregate demand globally," Kasaija said.

Adding that the situation has been worsened by the Russia -Ukraine conflict which has disrupted supply of oil and cereals such as wheat, corn and sunflower oil.

"In the past two years, crude palm oil prices have increased due to increased demand by China and India, plus labour shortages in Malaysia," he added.

According to the Uganda Bureau of Statistics (UBOS), cooking oil has registered the highest rise in price by 21% between December 2021 and February 2022 and a 77.6% rise in past one year.

The price of laundry bar soap has increased by 20% between December 2021 and February 2022 and by 47.8% in past one year. Petrol has risen by 15.3% in the past 3 months and 34% during the past one year.

Consumer price index for February 2022 increased to 3.2% from 2.7% in January 2022.

The increase in commodity prices has left several Ugandans struggling to increase their budgets, as it now costs more to put food on the table, and provide for their families.

Kasaija, in his media briefing added that the situation has been further worsened by unscrupulous speculators who he said are taking advantage of the situation by hoarding essential commodities in order to create artificial supply shortages and drive up prices.

Interventions

According to the Kasaija, the main causes of the increase in commodity prices are external and thus beyond ability of policy makers in any one country to deal with directly.

He however asked the public not to panic or alarm people as “this is a temporary situation that is going to subside sooner or later.”

"The government through the Bank of Uganda is monitoring and responding with necessary monetary policy to ensure inflation stays within target and maintain macroeconomic stability," Kasaija said.

“The government will also continue to support farmers to grow more food and vegetable seeds and cereals,” he added.

In order to cushion consumers against high fuel prices, Kasaija said that government through the ministry of Energy and Mineral Development is reconsidering its regulatory role in domestic fuel market to ensure that fuel price movements are a true reflection of the economic environment.