Yemen Situation Report, 5 Aug 2021

HIGHLIGHTS

• Food prices increase as currency depreciation hits record low

• Without additional resources, more people risk falling into acute need category

• Aid agencies gear up in response to flooding

• Prolonged fuel crisis worsens the humanitarian situation

• Strategic field visits by humanitarian leadership in Yemen

KEY FIGURES

20.7M People in Need

12.1M People in Acute Need

4M Displaced People

BACKGROUND

Food prices increase as currency depreciation hits record low The depreciation of the Yemeni Rial and the disparity in monetary policies continue to contribute to a widening exchange rate gap between the north and south of Yemen, making it increasingly difficult for ordinary citizens to afford basic necessities including food, according to the Famine Early Warning Systems Network (FEWS NET) – a provider of early warning and analysis on food insecurity.

In the south, the Yemeni Rial dropped from YER 900 per USD in May 2021 to over YER 1,000 per USD by end-July 2021 on the parallel market; the overall depreciation represents a more than 36 per cent loss of value compared to the same time last year. Meanwhile, in the north, the exchange rate has remained relatively stable since late 2019, remaining below YER 600 per USD. Before the war, the Rial traded at YER 215 to the US dollar.

The depreciation of the Yemeni Rial is a major driver of food insecurity in import-dependent Yemen, where millions of people cannot afford enough food to get them through the day. Food prices have risen by at least one-third in six of Yemen’s 22 governorates in the first five months of this year, and there is a double-digit rise of 10 per cent or more in food prices in 15 out of 22 governorates. Yemen has not experienced such a rapid increase in food prices since late 2018, when the country was last on the brink of famine, with foreign currency injections at the time helping to avert famine by stabilizing the economy. By June 2021, the minimum food basket costs YER 9,133 per person in the south and YER 6,453 in the north, highlighting significantly higher food prices than in 2018 – by 62 per cent in the south and more than 18 per cent in the north.

While the impact of the Rial’s devaluation is worst in the south, where families in Lahj, Aden and Abyan governorates have seen prices increase by a third since the start of the year, insufficient food consumption – a measure of hunger tracked by food security partners – has surpassed the ‘very high’ threshold of 40 percent in eight governorates (Al Jawf, Amran, Shabwah, Al Bayda, Abyan, Ad Dali’, Lahj, Raymah) after a temporary decline during Ramadan in May. Insufficient food consumption is above 30 per cent in a further seven (Hajjah, Sana’a City, Sana’a, Ma’rib, Dhamar, Ibb, Ta’iz).

To help families cope with rising food prices, WFP has increased the cash assistance amount since 1 July. Yet it remains challenging to keep pace with such rapid price increases which threaten to worsen an already critical hunger crisis. WFP has also increased food assistance in all famine-risk areas since the start of the year as additional funds have become available. However, some 3 million of the 13 million people WFP supports with food assistance still only receive food assistance on alternate months as funding remains uncertain.