{"id":56881,"date":"2023-10-08T15:02:21","date_gmt":"2023-10-08T15:02:21","guid":{"rendered":"https:\/\/www.africa-press.net\/uganda\/all-news\/inflation-slams-brakes-on-construction-sector"},"modified":"2023-10-08T15:19:05","modified_gmt":"2023-10-08T15:19:05","slug":"inflation-slams-brakes-on-construction-sector","status":"publish","type":"post","link":"https:\/\/www.africa-press.net\/uganda\/all-news\/inflation-slams-brakes-on-construction-sector","title":{"rendered":"Inflation slams brakes on construction sector"},"content":{"rendered":"

Africa-Press – Uganda. <\/strong><\/span>The rising costs of construction and building materials in Uganda have forced Ugandans to stretch their budgets significantly in order to rent or buy a home.<\/b><\/p>\n

Data from the Uganda Bureau of Statistics (Ubos) shows that the rate at which costs increase in the construction sector rose by 0.2 percent in August compared to 0.1 percent the month prior.<\/p>\n

\u201cSpecifically, demolition and site preparation inflation increased by 0.5 percent in August compared to 0.1 percent decrease registered in July,\u201d Ubos noted in a statement.<\/p>\n

Additionally, the high cost of civil engineering structure establishments exacerbated the monthly change in building material prices, affecting primarily the construction of residential buildings. Most notable were the increments in the price of diesel, iron, steel or aluminium plates, adhesives and seals and nails, bolts, and screws.<\/p>\n

However, electrical, plumbing and other construction activities inflation decreased by 0.3 percent in August compared to 0.7 percent decrease registered in July.<\/p>\n

\u201cSupply chain disruptions caused by the Ukraine war, which delayed delivery of inputs to local industries, combined with an increase in fuel prices, which has exacerbated logistic expenses for our local manufacturing companies, have largely affected the price of these construction input materials,\u201d said Mr Martin Kyeyune, a Ugandan construction economist.<\/p>\n

The situation has gotten worse due to the construction industry\u2019s declining investment returns, which have made it even less appealing to financial institutions for credit. The Covid-19 pandemic\u2019s impact on economic activity was largely responsible for the outcome in 2020 as consumer spending and business output were both hampered by lockdowns.<\/p>\n

Data from the Bank of Uganda (BoU) reveals that the construction sector has experienced low revenue growth for the last four years in a row, going from about $1 billion to $500 million in 2021. A number of commercial banks are consequently reluctant to lend to an industry whose returns are long-term.<\/p>\n

\u201cThe tightening in the building, mortgage and real estate sector was mainly attributed to the low property rates and decreasing occupancy levels,\u201d BoU noted in the fourth quarter of the 2022\/2023 financial year Bank Lending Survey Report<\/p>\n

\u201cReturns in the real estate sector are long-term, whereas banks rely on short-term deposits,\u201d Mr Kyeyune said.<\/p>\n

Low sales<\/b><\/p>\n

Industry players such as Hima Cement Ltd reported low sales volumes in 2022 as a result of global inflationary pressures and supply chain disruptions, which have harmed many manufacturers who rely on imports for inputs. According to Bamburi Cement Ltd, the parent company of Hima Cement, \u201cthe decline in sales volumes and turnover is primarily due to a decrease in government infrastructure project spend, suppressed consumer purchasing power, and stunted private sector credit growth, which was exacerbated by market contraction experienced in the month of May due to Kenya\u2019s general elections.\u201d<\/p>\n

Energy and power costs are the biggest cost components in the production and distribution of construction input products. \u201cThis has led to inflation of prices of imported raw materials and energy costs, especially on coal thus eroding the margins,\u201d Bamburi Cement noted.<\/p>\n

Inflationary pressures<\/p>\n

When the inflation rate rises, the price of building materials rises as well. Clients not only account for the rise in construction costs but also pay a surcharge on construction prices due to the vagueness of inflation.<\/p>\n

\u201cNot only material prices, but also labour wages are affected by inflation, which has had an impact on the final project cost. To address the cost overrun problem, it is necessary to develop a technique for formulating the budget at the start of the project by considering the inflation aspect before finalising the budget estimation,\u201d a 2023 Ain Shams Engineering journal on the impact of inflation rate on construction projects budget, notes.<\/p>\n

The government is aware of the inflationary pressures that are affecting the manufacturing industry and is combating them by freezing the Central Bank rate at 9.5 percent.<\/p>\n

To save the vulnerable sector, investors in the construction, building, and manufacturing sectors are borrowing overseas at low interest rates in order to achieve competitive returns on investment.<\/p>\n

BoU policy statement<\/b><\/p>\n

The BoU stated in its October 2023 Monetary Policy Statement that annual inflation has continued to moderate despite these recent increases in fuel prices. This is due to the implementation of appropriate monetary and fiscal policies, the waning impact of the drought on food prices, and the easing of global cost pressures.<\/p>\n

From 3.5 percent and 3.3 percent in August 2023, the annual headline and core inflation rates fell to 2.7 percent and 2.4 percent, respectively, in September 2023.<\/p>\n

The World Bank Group has even supported the BoU\u2019s decision to hold off on tightening monetary policy in light of the country\u2019s easing inflationary pressures.<\/p>\n

\u201cAt the sub-regional level, inflationary pressures are receding in most East and Southern African countries- and in some cases, they are within or close to medium-term targets for instance; Kenya, South Africa, and Uganda. It is likely that these countries may pause their hiking cycle, while others may need to continue to fine-tune policy to reduce inflation further,\u201d the World Bank stated in its revised sub-Saharan economic outlook report, published last week.<\/p>\n

Source: Monitor<\/b><\/p>\n

For More News And Analysis About Uganda<\/a> Follow Africa-Press<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Africa-Press – Uganda. The rising costs of construction and building materials in Uganda have forced Ugandans to stretch their budgets significantly in order to rent or buy a home. Data from the Uganda Bureau of Statistics (Ubos) shows that the rate at which costs increase in the construction sector rose by 0.2 percent in August […]<\/p>\n","protected":false},"author":84,"featured_media":56880,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,6,258],"tags":[233,240,234],"class_list":["post-56881","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-all-news","category-files","category-to-homepage","tag-africa-press","tag-africa-press-uganda","tag-uganda"],"yoast_head":"\nInflation slams brakes on construction sector - Uganda<\/title>\n<meta name=\"description\" content=\"The rising costs of construction and building materials in Uganda have forced Ugandans to stretch their budgets signi ...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.africa-press.net\/uganda\/all-news\/inflation-slams-brakes-on-construction-sector\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Inflation slams brakes on construction sector\" \/>\n<meta property=\"og:description\" content=\"The rising costs of construction and building materials in Uganda have forced Ugandans to stretch their budgets signi ...\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.africa-press.net\/uganda\/all-news\/inflation-slams-brakes-on-construction-sector\" \/>\n<meta property=\"og:site_name\" content=\"Uganda\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/AfricaPressTunisiaa\" \/>\n<meta property=\"article:published_time\" content=\"2023-10-08T15:02:21+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-10-08T15:19:05+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/static.africa-press.net\/uganda\/sites\/34\/2023\/10\/sm_1696765681.856499.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1200\" \/>\n\t<meta property=\"og:image:height\" content=\"800\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"cfeditoren\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"cfeditoren\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/inflation-slams-brakes-on-construction-sector#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/inflation-slams-brakes-on-construction-sector\"},\"author\":{\"name\":\"cfeditoren\",\"@id\":\"https:\/\/www.africa-press.net\/uganda\/#\/schema\/person\/068c7ab4e9634ae78ec5d54ec46598bb\"},\"headline\":\"Inflation slams brakes on construction sector\",\"datePublished\":\"2023-10-08T15:02:21+00:00\",\"dateModified\":\"2023-10-08T15:19:05+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/inflation-slams-brakes-on-construction-sector\"},\"wordCount\":845,\"commentCount\":0,\"image\":{\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/inflation-slams-brakes-on-construction-sector#primaryimage\"},\"thumbnailUrl\":\"https:\/\/static.africa-press.net\/uganda\/sites\/34\/2023\/10\/sm_1696765681.856499.jpg\",\"keywords\":[\"Africa Press\",\"Africa Press-Uganda\",\"uganda\"],\"articleSection\":[\"all news\",\"files\",\"to-homepage\"],\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\/\/www.africa-press.net\/uganda\/all-news\/inflation-slams-brakes-on-construction-sector#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/inflation-slams-brakes-on-construction-sector\",\"url\":\"https:\/\/www.africa-press.net\/uganda\/all-news\/inflation-slams-brakes-on-construction-sector\",\"name\":\"Inflation slams brakes on construction sector - 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