Food prices rise in IRG areas in response to currency depreciation, but decline in SBA areas following reduced importation costs

• Since the UN-mediated truce took effect on April 2, 2022, the value of the Aden-based Rial against the USD has declined somewhat, although the parallel market exchange rate remained under 1,300 YER/USD through the end of April 2023 despite fluctuations. However, in May, the local currency depreciated farther, reaching a peak of 1,338 YER/USD (selling rate) on May 27. This deprecation has likely been driven by a combination of factors, including the recent lack of progress in the political negotiations, the decline in revenue of the internationally-recognized government (IRG), and high seasonal demand for hard currency with the approaching Hajj season. Meanwhile, the value of the Sana’a-based Rial remained stable during May at an average rate of 530 YER/USD.

• In late April and May, many highland areas continued to experience flooding from heavy seasonal rainfall that started in mid-March, causing access constraints and further damage to homes, property, and infrastructure. Notably, in April, flooding caused significant damage to fragile spate irrigation infrastructure that was in need of maintenance across much of Yemen’s main agricultural wadies, including wadi Zabid, Siham, Tuban, Mour, Bana, and Rimah. Also indicative of the scale of damage, heavy rainfall led to a massive dam failure as well as damage to homes and agricultural land in Al Mahwit at the end of April. Meanwhile, in Yarim district of central Ibb, flooding temporarily cut off most of the key roads that connect Yarim to other parts of the country; the area affected is a major producer of the country’s potatoes and other vegetables, and the flooding likely disrupted normal trade.   

• Despite heavy rainfall, most farmers in highland areas have started preparations for cultivating cereals and vegetables (including tomatoes, onions, and chili). However, in some affected areas, torrential rainfall has caused a reduction in farming activity due to inundated soils. Some farmers – especially in the central and western portions of the highlands – were unable to harvest their vegetables due to the very wet land and have lost their crops due to flooding, reducing access to typical seasonal food and income. Poor households relying on agricultural wage labor have also lost income-earning opportunities due to the disruptions. On the other hand, above-average rainfall is contributing to better availability of natural vegetation, which is expected to support improvement in livestock body conditions and allow livestock keepers to benefit from higher selling prices during Eid Al Adha in late June.

• Driven largely by the depreciation of the currency, staple food prices in the IRG reference market of Aden increased in late May, ending a period of general price stability since January 2023. On the other hand, the Sana’a-based Ministry of Trade and Industry (MTI) again lowered the price ceilings of staple food commodities in areas controlled by the Sana’-based authorities (SBA), largely linked to reduced importation costs following the recent easing of importation restrictions. For instance, the authorities reduced the price ceiling for wheat flour by 25 percent, from 400 YER/kg to 300 YER/kg. This is expected to slightly improve access to food for many poor households in SBA-controlled areas, at least partially offsetting the impacts of the reduced humanitarian food assistance provision that has been ongoing for more than a year. However, despite the recent declines, food prices in SBA areas remain above the five-year average and significantly higher than pre-conflict levels.

• On top of above-average food prices and already limited access to income, recent floods have caused many households to experience damage to homes and property and disruptions to typical food and income-earning activities. Given this and ongoing reductions in humanitarian food assistance, millions of poor households are likely to be facing food consumption gaps, including internally displaced households who are not receiving sufficient support. At the governorate level, Crisis (IPC Phase 3) and Crisis! (IPC Phase 3!) outcomes are likely to persist across most of the country throughout the projection period through September 2023. In Marib, where conflict continues to disrupt livelihoods and drive population displacement and where many displaced households were severely impacted by the recent floods, Emergency (IPC Phase 4) outcomes are expected to persist.

Recommended Citation: FEWS NET. Yemen Key Message Update, May 2023: Food prices rise in IRG areas in response to currency depreciation, but decline in SBA areas following reduced importation costs, 2023.