KEY HIGHLIGHTS
The food security outlook for the first quarter of 2025 is concerning across the nation, as households are likely to continue experiencing larger gaps in food consumption. In areas controlled by the Sana Based Authorities (SBA), food prices are anticipated to remain mostly stable. However, household purchasing power is expected to remain extremely weak, resulting in limited food access during the peak lean season. A similar situation is projected in the Government of Yemen (GoY) controlled areas, where additional price increases are expected to reach record levels above those of 2024 and the three-year average (see Figure 9). Despite the relatively stable cost of the minimum food basket compared to the previous month, there will be an increased reliance on markets due to low-income levels and reduced household purchasing power. This will limit food access and worsen food insecurity in many areas.
The situation could deteriorate further if the ongoing Gaza conflict and its impacts escalate.
In December 2024, staple food prices remained generally stable month-on-month at elevated levels in both GoY and SBA areas. However, in GoY areas, food prices are approximately 36 percent higher than the three-year average, whereas in SBA areas, prices are 10 percent lower. In December 2024, prices for key staples such as Basmati rice, kidney beans, cooking oil, and wheat flour remained at high levels in GoY areas, unchanged from November (see Table 1 and Figure 1). The stability in SBA areas was bolstered by strict enforcement of exchange rate and food price controls. In GoY areas, the market's response to the KSA's injection of $500 million into the economy resulted in temporary price stabilization. Compared to the previous month, prices remained relatively unchanged; however, when measured against the same month last year and the three-year average, food prices in GoY areas saw significant increases ranging from 24% to 37% and 20% to 61%, respectively, while prices slightly decreased in SBA areas.
There is a risk of substantial price inflation in the coming months in both regions due to the SBA's ban on importing wheat flour through the As Salif and Al Hodeidah ports. A circular issued on January 6, 2025, to shipping lines stated that the SBA will only permit the importation of wheat grains for local milling, citing the need to develop local milling industries. While this could benefit employment and the economy in the long run, the sudden ban, without a sufficient transition period, combined with low domestic milling capacity and a milling monopoly, raises concerns. It is likely to lead to reduced imports, disrupted trade and supply, and increased wheat flour prices in the short term.
Additionally, this decision incentivizes traders to import wheat flour through Aden Port, incurring significant transportation costs, roadblock charges, and double taxation by the SBA, which will ultimately be passed on to consumers in the form of higher prices. This measure comes just two months before Ramadan, the peak demand and consumption period, further heightening inflation risks.
Consistent with the stability of food prices, the Minimum Food Basket (MFB) remained unchanged month-on-month in both areas.
However, it increased by 27 percent year-on-year and by 33 percent compared to the three-year average in GoY areas. In contrast, the MFB in SBA areas decreased by 8 percent and 14 percent, respectively. Significant year-on-year increases in the Minimum Food Basket (MFB) were observed in GoY Governorates: Shabwa (46%), Marib & Al Mahrah (33%), Taizz (30%), Lahj (29%), Hadramout (25%), and Al Dahale (17%) (see Figure 3). Notably, despite nominal decreases in MFB costs in SBA areas compared to the same month last year (8%) and the three-year average (14%), many low-income households still struggle to afford food in markets, similar to those in GoY areas. The value of the US dollar is comparable in both SBA and GoY areas, impacting households equally. In December 2022, the real MFB cost (in USD) was about $100 in both regions; however, by December 2024, it was $8 (10%) higher in SBA areas than in GoY areas. Over the past three years, the MFB in USD equivalent has decreased in both areas due to rapid currency depreciation outpacing the overall increase in MFB prices (see Figure 2).
In December 2024, the exchange rate of the local currency (YER) against the US dollar remained stable month-on-month in GoY areas, marking a reversal of the significant currency decline previously observed in regions controlled by the GoY. Over the past year and a half, the local currency in areas controlled by the GoY has experienced a significant decline, depreciating by 26% year-on-year and 36% compared to the three-year average (3-YA) as of December 2024. However, the YER in GoY areas remained stable in the last month of 2024, following a $500 million injection into the economy by KSA. This stability is expected to be temporary, as has been observed in previous years, with the local currency in GoY areas projected to begin depreciating again in the coming months. In contrast, the YER in SBA areas has remained relatively stable year-on-year and appreciated by 6% against the USD compared to the three-year average (see Table 1 & Figure 4). The weak value of the YER in GoY areas is primarily attributed to depleting foreign exchange reserves and declining oil revenues.
Meanwhile, strict exchange rate regulations in SBA areas have alleviated some pressure on the YER, despite ongoing acute shortages of USD.
In December 2024, diesel and petrol prices remained stable month-on-month in both SBA and GoY areas; however, they were considerably higher in GoY areas compared to the same month last year and the three-year average. During the reporting month, diesel and petrol prices remained unchanged from the previous month in most markets (see Table 1 & Figure 6). However, compared to the same month last year and the three-year average (3-YA), diesel prices in GoY areas increased significantly by 6–8%, while petrol prices rose by 28–32%. In contrast, petrol and diesel prices in SBA areas remained stable compared to levels a year ago and the three-year average.
The increase in fuel prices in GoY areas is primarily attributed to the depreciation of the local currency (YER) against the US dollar. When expressed in USD equivalents, fuel prices in SBA areas are slightly higher than those in GoY areas.
Wheat imports through As Saleef and Aden Ports declined in December 2024 due to ongoing airstrikes and reduced port handling capacity at As Saleef. Conversely, wheat imports through Al Hodeidah saw a significant increase following the receipt of delayed shipments. In December 2024, wheat imports through As Saleef and Aden Ports decreased by 84 percent and 66 percent, respectively, compared to the previous month. In contrast, wheat imports through Al Hodeidah increased by 39 percent from the preceding month. When compared to December 2023, wheat imports were 12% higher in Aden and 41% higher in Al Hodeidah, while imports in As Saleef dropped by 73% (see Figure 5). The decline in imports is attributed to dollar challenges in Aden and damage to As Saleef Port, caused by ongoing airstrikes that have reduced its cargo handling capacity. Ras Issa Port has also suffered destruction from sustained airstrikes, causing ships to divert from these ports to mitigate risks. Overall, wheat imports through the three ports for the year 2024 totalled 4 million MT, which is 14% higher than in the same period last year, ensuring sufficient availability in most markets across the country.
In December 2024, agricultural casual labor wages decreased slightly due to a decline in demand for labor following the second season harvests. Overall, the current average income levels continue to be insufficient to cover the cost of the Minimum Food Basket. Casual labor wage rates, encompassing both agricultural and non-farm work, remained largely unchanged from last month, reflecting the reduced demand for agricultural labor following the end of the second season harvest. While labor wages in SBA areas were generally stable, increasing by 2-5%, they rose significantly in GoY areas by 5-22% compared to the same month last year and the threeyear average. This increase closely corresponds with the rise in the cost of the Minimum Food Basket (see Table 1 and Figure 7). Overall, households in both regions are struggling to afford food due to the simultaneous increase in the cost of the Minimum Food Basket and the depreciation of the YER in GoY areas. Additionally, many households in SBA areas continue to face difficulties stemming from limited livelihoods and loss of income due to the suspension of public sector wages.
In December 2024, livestock prices remained stable in SBA areas, while they experienced a slight decrease of 2-3% in GoY areas.
However, prices for goats and sheep aged 6 to 12 months are significantly higher in GoY areas, with increases of 25-28% compared to the same month last year, and 45-50% compared to the three-year average. In SBA areas, livestock prices in December were 2-8% higher yearon-year, with a minimal increase of 1-2% compared to the three-year average (see Table 1 and Figure 7).
In December 2024, the purchasing power of livestock keepers and casual laborers remained largely stable month-on-month. During the reporting month, the terms of trade (ToT) between agricultural/off-farm casual labor and wheat flour remained relatively stable in both GoY and SBA areas, reflecting a similar trend observed in the exchange rate between livestock (sheep/goats) and wheat flour. Although the ToT for both livestock and labor relative to cereals was higher than levels from a year ago and the three-year average, households' ability to purchase food in markets remained constrained due to critically low herd sizes and limited off-farm labor opportunities (see Figure 7 & Figure 8).
Fish prices stabilized in December 2024 as the peak fishing season comes to an end. Thamad fish prices remained generally unchanged during the reporting month compared to November (see Table 1). The period from October to December coincides with the peak fishing season and the availability of this fish in the Arabian Sea and the Gulf of Aden, which contributes to lower or stable market prices. However, despite the month-on-month stability, Thamad fish prices in GoY areas were still significantly higher than the three-year average by 20%. In contrast, fish prices in SBA areas were 15% lower than the three-year average.