Industrial PPI rises in 3rd Qrt as consumers cut demand

The Producer Price Index (PPI) for local sales, which measures the average change in prices of locally  produced products, registered a modest rise of 1.19 percent from July to September, according to official statistics. A joint statement by the National Bank of Rwanda (NBR) and the National Institute of Statistic of Rwanda (NISR) said that this reflects a 3.32 percentage point drop in prices of goods manufactured for local sales in the third quarter of the year 2008.
L-R : Factory gate prices for beverages dropped ; Pyrethrum boost export prices. (File photo)
L-R : Factory gate prices for beverages dropped ; Pyrethrum boost export prices. (File photo)

The Producer Price Index (PPI) for local sales, which measures the average change in prices of locally  produced products, registered a modest rise of 1.19 percent from July to September, according to official statistics.

A joint statement by the National Bank of Rwanda (NBR) and the National Institute of Statistic of Rwanda (NISR) said that this reflects a 3.32 percentage point drop in prices of goods manufactured for local sales in the third quarter of the year 2008.

However, prices of products manufactured for local consumption registered a slight decline of 0.02 percent at the end of September compared to the previous month, easing inflationary pressures as manufacturers attempted to  boost local demand.

“This has to do with demand—it declined. This might be one of the consequences of the global financial crisis. We have to investigate,” Diane Ngendo Karusisi, Senior Advisor at the NISR said in an interview with Business Times.

The statement says that food products, beverage and tobacco registered a decrease of 0.05 percent in September 2009, while other outputs remained unchanged.
On annual basis, between September 2008 and September 2009, the index of products manufactured for local sales decreased by 2.10 percent in July, 3.86 percent in August and 3.98 percent in September 2009.

“The main causes of price decrease for some manufactured products are competition from imported products and manufacturer’s strategy to try to encourage demand,” the two institutions said in a joint statement.

Statistics show that the index of food products, beverages and tobacco registered a decrease of 2.14 percent in September 2009 when compared to the same period of previous year.

Manufacturing of sugar dropped by 20.21 percent while production of dairy products retreated by 3.35 percent.
“People were getting less access to credit…which means that households are consuming less,” Karusisi explained.  

However the statement said that production, processing and preserving of meat and meat products jumped by 17.16 percent to offset the decrease.

The decrease was also mostly due to the overall effect of price changes in the manufacture of chemical products which declined by 15.55 percent and fabricated metal products that reduced 19.97 percent.

Manufacture of plastic products, tubes, retreading and rebuilding of rubber tyres rose by 2.53 percent, furniture 4.32 percent, manufacture of textiles, wearing apparel, tanning and dressing of leather 21.53 percent have partially offset the negative trend of this group.

The quarterly index for manufacturing exports registered an increase of 7.78 percent in the third quarter of this year compared to the previous quarter on account of higher prices fetched from refined pyrethrum.

This reflects an increase of 4.98 percent compared to the same quarter of the previous year.

The PPI ffor exports excluding imports increased by 2.16 percent compared to the previous month. On annual basis, the index for September 2009 was 7.48 percent higher.

Rwanda’s economy has faced tremendous challenges throughout this year with a major setback in the local credit market which has crippled the manufacturing and service sectors.

“We cannot say that we are in a recession. The economy is not just performing as good as last year but still, there is growth,” Karusisi said. 

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