Famine Early Warning Systems Network

Key Messages

• Several countries in the region have suspended financial support to the Yemeni government, most notably Saudi Arabia. Oil revenue has continued to decline due to reduced production and low international oil prices. Foreign exchange reserves declined 31 percent between 2009 and 2014, and are likely to drop further in the coming months due to reduced oil revenue and regional funding. The government may be unable to maintain fuel subsidies, social spending, and public sector salaries. Given the high demand for imported commodities including food, it is likely that the Yemeni rial (YER) will depreciate against the U.S. dollar (USD) and other currencies.

• Due to conflict-related disruptions to supply of imported foods, as well as the likely reduction in fuel subsidies and depreciation of the rial (YER), food prices are likely to increase in the coming months. This upward pressure on domestic food prices could be mitigated to some extent by low international commodity prices, including fuel and wheat. Disruptions to sources of income and the potential increase in the cost of food and other goods are likely to reduce household purchasing power. Because almost all poor households rely heavily on market purchases of food, a deterioration in purchasing power would likely decrease the quantity and quality of food consumed. 

• Most areas of Yemen are expected to remain in Crisis (IPC Phase 3) through June 2015, with increased need for humanitarian assistance as the lean season and political crisis continue.