Yemen

Yemen Key Message Update: Rising prices continue to make food increasingly unaffordable for many households, July 2021

Format
Situation Report
Source
Posted
Originally published
Origin
View original

Attachments

Key Messages

  • In Yemen, rising food prices—particularly in IRG-controlled areas due to depreciation of the Aden-based Rial—are driving declining purchasing power in an environment of significantly below-average access to income. Given this and ongoing conflict—including escalated fighting in Marib since the beginning of the year and recently intensified fighting in Al Bayda and Shabwah in July—high assistance needs and widespread Crisis (IPC Phase 3) outcomes are likely to continue at the governorate level, with worst-affected households likely to face Emergency (IPC Phase 4) or Catastrophe (IPC Phase 5) outcomes. Although not the most likely scenario, Famine (IPC Phase 5) would be possible if food supply is cut off for a prolonged period of time.

  • The Yemeni economy continues to be impacted by shortages of foreign currency due to protracted conflict, political instability, and tensions in the south between the internationally recognized government (IRG) and the Southern Transitional Council (STC). The local currency has continued to depreciate in IRG-controlled areas despite regulations issued by the Central Bank of Yemen (CBY) in Aden (mostly unenforced directives to exchange businesses to cease currency speculation), with the parallel market exchange rate reaching a new record when it surpassed 1000 YER/USD on July 11, 2021. Following a brief period of appreciation around the Eid holidays, the exchange rate again surpassed 1000 YER/USD in late July. This depreciation is largely attributable to the reported arrival of currency printed over the last couple of months alongside ongoing currency speculation. Currency depreciation continues to drive price increases of most food and non-food commodities in IRG-controlled areas, rendering food increasingly unaffordable for many households despite availability in markets.

  • According to data from FAO, the average cost of the minimum food basket at the national level has increased by more than 20 percent since the beginning of the year, to reach levels 29 percent higher than last year and 85 percent above average as of the last week of June. IRG areas have been worst affected, though food prices have also been increasing in SBA-controlled areas due largely to rising fuel prices. After more than six years of conflict and economic crisis, many poor Yemeni households have exhausted less-severe available livelihood coping options such as selling household assets and buying food on credit. Additionally, available information suggests that an increasing number of middle-income households are also engaging in strategies including borrowing, buying food on credit, or buying cheaper foods, while other middle-income households have already exhausted these strategies alongside poor households. Key informant information suggests an increasing number of worst-affected households are engaging in more severe strategies such as early marriage of daughters or skipping meals.

  • According to news reports, customs workers at Aden seaport announced a strike on July 26. This followed a decision by IRG authorities to double the exchange rate used in customs transactions for imports of non-food commodities (excepting fuel) from 250 to 500 YER/USD. The strike is expected to be resolved before any shortages in commodities would be expected, though further upward pressure on prices of non-food commodities is anticipated.

  • The second rainy season started in the highlands in late June/early July, with average to above-average rainfall recorded to date as of mid-July. This is expected to support crop conditions and availability of pastures in highland areas, which will likely support livestock body conditions. However, atypical storms and heavy rainfall in lowland areas have caused flooding in eastern Yemen since mid-July. The governorates of Al Maharah, Hadramaut, Shabwah, Abyan, and Al Jawf were all affected by flash floods, causing loss of life, destroying crops, and resulting in damage to critical infrastructure including roads and telecommunication networks.