What Explains Uganda's Surge in Laundry Soap and Cooking Oil Prices in 2021/22?

This policy note investigates the recent spike in laundry soap and cooking oil prices in Uganda between June 2021 and March 2022. The upsurge primarily explained the price increase in the price of Crude Palm Oil (CPO) −the key raw material for making soap and cooking oil. Evidence reveals that between July 2021 and February 2022, the contribution of the international price of CPO in the final retail price drastically increased to 63 percent from 57 percent registered in the first half of 2021 (January to June 2021). Imposing of an import duty on CPO in July 2021 also affected the input mix used by manufacturers. To a lesser extent, the gradual rise in international shipping costs and the increase in global fuel prices also contributed to the escalation of soap and cooking oil prices. The study recommends a temporary waiver of the 10 percent import duty and 1.5 percent infrastructure levy on CPO and related product imports to contain the recent surge in commodity prices in the short term. Implementing this measure could increase the importation of CPO and stabilise the prices of laundry soap and cooking oil by lowering the raw material cost for soap making.