Local industry production costs drop by 3.8% in Q2

Local manufacturers incurred slightly lower costs during the second quarter of the year, the statistics agency index for April-June indicates.

Local manufacturers incurred slightly lower costs during the second quarter of the year, the statistics agency index for April-June indicates. 

According to the National Institute of Statistics of Rwanda (NISR), the Producer Price Index (PPI) quarterly report released last week, manufacturers’ expenses for producing goods and services declined by 3.84 per cent in the second quarter of the year, but dropped marginally by 1.39 per cent year-on-year. The drop in production cost for goods and services targeting both local and export markets was attributed to a 1.78 percentage point reduction in production of coffee and tea products during the period, as well as 1.14 percentage points drop in the cost of making non-ferrous metal ores, the report, covering April-July production, shows.

However, there was a growth of 3.79 percentage points in processing costs for coffee and tea, while that of non-ferrous metal ores was down 6.38 percentage points.

According to Sébastien Manzi, the NISR director of economic statistics, the cost of making goods for the local market decreased marginally by 0.25 per cent during the second quarter, down from 0.61 per cent the previous quarter, but rose 0.93 per cent compared to the same period last year.

PPI measures the average change over time in prices received by domestic producers for the production of their goods and services, covering mining, manufacturing and energy sectors.

According to the index, the rise in manufacturing expenses in April was due to 0.74 percentage points increase in production charges incurred by coffee and tea makers, which also expanded marginally in June by 0.15 percentage points. However, manufacturing expenses for non-ferrous metal ores and sugar decreased in May and June.

The costs for making export products declined 11.62 per cent quarter-on-quarter, while it was down 6.27 per cent on annual basis, largely driven by low production costs for coffee products and non-ferrous metal ores.

The cost of producing coffee targeted for the export market declined so did that of non-ferrous metal ores. However, tea production cost rose 4.42 percentage points over the period.

Eric Rukwaya, the Rwanda Farmers Coffee Company sales and marketing manager, said the report reflects the situation on the ground.

“The index helps producers plan and forecast trends.” Rwanda’s industrial sector grew by 7 per cent and contributed 15 per cent to GDP during the first quarter of the year.

business@newtimes.co.rw

 

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