Cost of living for poor households on the rise

Sunday June 9 2019

Tariffs

Transport prices are among the costs that have increased, piling more pressure on households whose salary remains relatively the same. PHOTO | CYRIL NDEGEYA 

JOHNSON KANAMUGIRE
By JOHNSON KANAMUGIRE
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The rise in the cost of basic items including foodstuffs, housing, transport and utilities has driven up the cost of living for poor households in the country.

Families reported having to pay more for the same items they could afford on the current budgets, yet incomes have barely increased, affecting their spending power.

For instance, a family of four who relied on Rwf60,000 monthly to buy food and other items now needs an additional Rwf25,000 to Rwf35,000 to make it to the end of the month after prices of basic commodities rapidly surged over the past three months.

“Unless one is able to do without some essentials, it is hard to make ends meet. And it is worse when one considers things like rent and school fees, which keep increasing,” said Cleophas Uwihirwe, an employee at a security firm.

The situation was exacerbated by disruptions in trade between Rwanda and Uganda trade, utility, housing and transport related costs registered this year.

Travel restrictions alone resulted in a sharp rise in prices of key imported commodities such as cooking oil, edible fruits, spices, silverfish and nuts among others. The prices, which increased by 20 per cent weeks after the restrictions in February, have since risen to a record high before most items became unavailable in the market.

Alternatives

Consumers, who have since turned to a few alternatives which are produced locally as well as imports from countries like Tanzania, decried that the goods continue to be in short supply and are very expensive.

“There are so many items we no longer stock due to their shortage. Initially, it was that they were expensive but at least they were available. Now a few local products like those made by Inyange and Nyirangarama are in high demand and are only sold to bulk buyers who have since increased their retail prices,” said Eric Ndimubayo, a Kigali-based trader.

Local manufacturers are unable to meet the growing demand as their production has dwindled due to a shortage of raw and packaging materials, which they were importing through or from Uganda.

Thierry Kalisa, adviser at Urwibutso Enterprise, a foods and beverages maker, said the firm had reduced its production due to bottlenecks in the supply of a range of raw materials like fruits, bananas, sugar as well as the packaging materials, among other things it imported.

“We are banking on potentially obtaining alternatives from both Tanzania and China albeit at relatively higher costs. It is obvious that prices have to rise,” he said.

Prices of processed goods like juice, milk, bottled water and other items have already increased by more than 15 per cent as per surveys carried out by Rwanda Today in the retail market.

Besides, prices of products like sugar increased from Rwf36,000 to Rwf40,000 for a 50kg bag, while local and popular Tanzanian rice brands increased by Rwf3,000 a bag within three months.

Other food items that rose include maize flour, fruits, meat and beans, which increased by between Rwf200 and Rwf500 a kilo within three months.

More pressure

A survey at Kigali’s main food market showed that only the prices of cassava flour, Irish potatoes and vegetables remained relatively the same.

The overall increase in food prices is currently exerting additional pressure on low-income, poor households already strained by the recent rise in pump prices and the hiked water tariffs, which provoked outcry from an unhappy public.

The utility regulator increased fuel prices by Rwf73 on May 4 to Rwf1,096 per litre of petrol and Rwf1,091 per litre of diesel, fuelling a hike in transport costs, which are passed on to the end consumers.

Water tariffs were increased by more than 117.5 per cent and 104.6 per cent for medium consumers in the 5 to 20 cubic metres range and those consuming between 20 and 50 cubic metres respectively.

This saw a cubic metre sell at Rwf720 and Rwf845 from Rwf331, and Rwf413 respectively.

Like foods, utilities take up the largest share of the basket of items used to gauge inflation, alongside housing and transport.

Transport costs recorded by the Institute of Statistics increased by three per cent in April compared with the previous year and 0.2 per cent on monthly basis.

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