Yemen Market Watch Report, Issue No. 8 (December 2016)

Situation Report
Originally published
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  • Prices of food and fuel commodities continued to stabilize in December 2016, but remained significantly higher than the pre-crisis levels.

  • The cost of the minimum food basket further declined slightly in December, but 22% higher than the level estimated during the pre-crisis period.

  • Availability of food and fuel commodities have deteriorated in December 2016 due to reduced level of informal cross border overland imports and hoarding of essential commodities by opportunistic traders in anticipation of increased prices.

  • According to Alert for Price Spikes (ALPS) methodology, in December 2016, normal situation prevailed for vegetable oil and red beans, while wheat flour was on alert status and that for sugar continued to be at crisis level. The ALPS indicator for the cost of the minimum food basket persistently maintained normal status.

Macroeconomic Situation

The widespread conflict in Yemen which has been ongoing for the past twentytwo months has led to a multitude of consequences that include destruction of basic infrastructure, loss of livelihoods, disruption of social services and near-collapse socio-economic situation. Salary payments for public sector employees have been suspended since September 2016 affecting nearly 7 million people who are depending on that livelihood.

The liquidity crisis coupled with lack of foreign currency is pushing the country to catastrophic emergency situation. While the most recent positive emerging developments regarding substantial amount of new notes of the Yemeni Riyals printed in Russia has arrived at the Central Bank of Yemen (CBY) in Aden would likely ease the ongoing tension, its impact on the overall desperate situation is yet to be seen.

Imports of essential commodities including food items are gravely affected by the lack of foreign currencies and continued depreciation of Yemen Riyal (YER) against US Dollar (USD) – with the average exchange rate in December 2016 reaching as high as YER315/USD in parallel markets compared to the official rate of YER250/USD.