Free Access | 2024-04-12

Why have the prices for laundry soap and cooking oil in Uganda not responded to the declining global cost of inputs: An update

Authors/Editors: Brian Sserunjogi (PhD)

Abstract:

During May-July 2022, the global price for crude palm oil (CPO)—the primary input for laundry soap and cooking oil production — declined by 38%; however, the domestic price of soap and cooking oil only marginally changed. This policy note provides an update on the domestic and global dynamics regarding laundry soap and cooking oil prices since February 2022. Based on an in-depth literature review and secondary data analysis, this policy note shows the following: first, the rapid domestic escalation of both laundry soap and cooking oil prices that started in January 2022 had stabilised between April and July 2022. However, both prices remained greater than their pre-January 2022 level. Second, the global price of CPO and its derivatives has gradually declined since March 2022, driven by Indonesia’s reversal of a restrictive export policy on CPO. However, the global price decline is yet to rebound to its pre-June 2021 level. Third, local soap and cooking oil manufacturers have not quickly responded to the declining global CPO prices between March and July 2022 by rapidly increasing CPO imports to the pre-June 2021 levels. Instead, local soap manufacturers drastically but temporarily increased imports of CPO derivatives (Palm Oil Olein and Stearin), inputs that yield content of low-fat for soap and cooking oil manufacture. Lastly, global dynamics, namely, continued escalation of the Ukraine-Russia conflict, measures to contain inflation in advanced economies, high energy prices and escalating shipping costs, continue to have a direct bearing on the domestic retail prices of both soap and cooking oil.