Access to food remains constrained despite economic improvement in IRG areas

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The impacts of domestic and regional conflict on the economy continue to drive acute food insecurity in areas controlled by the internationally recognized government (IRG) and Sana’a-based authorities (SBA). New economic reforms implemented by the Aden-based Central Bank of Yemen (CBY-Aden) has led to rapid deflation in IRG-controlled areas in August, but staple food prices remain exceedingly high for a majority of households. In SBA-controlled areas, food and fuel prices remain stable due to stringent price controls, but a repressive business environment continues to restrict income-generating opportunities, limiting access to food. Overall, the alleviation of macroeconomic pressure in IRG-held areas is expected to mitigate FEWS NET’s prior concern for a worsening trend in food assistance needs in late 2025. However, FEWS NET still expects 50-55 percent of Yemen’s population will likely continue to face moderate to severe food consumption gaps.
In IRG areas, the rapid appreciation of the Aden-based Rial (YER) has driven down food and non-food prices, partially alleviating the protracted, steady decline in household purchasing power since 2018 and slightly increasing households’ access to food. The Aden-based YER has appreciated by 43 percent between July and August 2025, with the value rising to 1,624 YER/1 USD as of August 28. The cost of the minimum food basket dropped by 29 percent compared to July 2025, supported by price controls introduced by the Ministry of Trade and Industry for the first time.¹ The most notable price reductions by item include locally manufactured cooking oil (31 percent), wheat flour (35 percent), basmati rice (24 percent), non-basmati rice (28 percent), and sugar (33 percent). Diesel and petroleum prices also fell by 22 percent and 21 percent, respectively.
Monetary policy changes implemented by the IRG and CBY-Aden with support from bilateral and multilateral partners have been key to the recent, relative improvement in economic conditions in IRG-controlled areas. Policy changes include the imposition of exchange rate caps for purchasing and selling hard currency, including a cap of 428 YER against the Saudi Riyal. A new campaign is focused on shutting down illicit currency exchange networks, which have previously contributed to currency collapses by violating CBY-Aden regulations, ignoring fixed exchange rates, exceeding currency purchase limits, or operating in restricted or unauthorized areas.
The IRG and CBY-Aden have also taken administrative policy measures to reinforce the changes in monetary policy; however, while these measures are likely to stabilize the Aden-based Rial, sustained appreciation would require the restoration of oil export revenue or a larger, sustained inflow of foreign currency. Namely, the IRG and CBY-Aden established a National Committee to oversee import operations and related foreign currency requests through official channels for imports of 25 key food and non-food commodities that are routed through IRG seaports. Furthermore, the IRG has banned the use of foreign currencies as a substitute for the national currency. Banks and exchange companies are now prohibited from holding funds related to government entities, while hard currency sales for commercial properties must be approved by the National Committee. Additionally, limited personal transfers and foreign currency sales are capped at 5,000 USD to curb currency speculation and contribute to market stability.
The new monetary policies enacted by CBY-Aden and the IRG have disrupted illicit financial flows into SBA-controlled areas and intensified the SBA’s shortage of foreign currency reserves. This development is likely to hinder import financing for essential goods such as food, fuel, and medicine, leading to shortages of price-controlled goods on the formal market and raising prices for goods on the black market, placing further pressure on household purchasing power. Deepening market fragmentation will raise business costs as traders seek alternative channels to move goods and currency, further risking the expansion of the black market and complicating humanitarian operations (including the import and distribution of supplies). These dynamics are also expected to sustain elevated prices of agricultural goods in IRG areas, which source vegetables, qat, and fruit from SBA areas, despite the IRG’s efforts to implement monetary reforms.
SBA attacks on a commercial vessel in the Red Sea in early July 2025 marked an escalation from their previous campaign that had concluded in December 2024. The action raises the likelihood of retaliatory strikes on SBA port and power infrastructure, with adverse impacts on import flows, production costs, and local livelihoods. Unlike earlier attacks, which primarily resulted in property damage, the July incident caused multiple fatalities and involved taking hostages, marking the most serious attack on Red Sea ships to date. In late July 2025, the SBA announced the beginning of what it called the "fourth phase of the naval blockade of Israel," pledging to target all vessels linked to Israeli ports, regardless of their nationality or destination. Although no incidents were recorded in August, these events could pave the way for future escalations, especially following SBA missile and drone attacks on Israel and recent Israeli strikes in Sana’a on August 17 and August 24, including power plants, fuel stations, and other sites.
In early August, Al Qaeda in the Arabian Peninsula (AQAP) issued a statement demanding a halt in crude oil exports from the IRG. AQAP threatened to target critical ports for oil exports, which would have negative effects on the IRG economy, especially during a time when the IRG and CBY-Aden are implementing large-scale economic reforms. These demands are in response to civil unrest in the Hadhramaut Governorate, a major oil-producing area that primarily supplies crude fuel for the Aden Power Station and often exports oil illegally. The protests have stemmed from a lack of basic services and a deteriorating economic situation, and the threats from AQAP are related to oil being exported rather than being used internally. While AQAP may attempt to increase the frequency of its attacks against IRG forces, the attacks are not expected to have a significant impact on economic activity, market functionality, livelihoods, and population displacements.
After a historically dry rainy season between March and May, Yemen’s second rainy season, which occurs between July and October, is delayed and is expected to be cumulatively below average. However, monthly rainfall was above average in August, resulting in widespread flash flooding. These conditions are expected to lead to lower crop yields compared to previous years, with the most significant losses expected in Ibb, Lahij, Ta’izz, Al Dhale’e, Dhamar, Ma’rib, Hadramout, and Amran governorates. As a result, cereal stocks are expected to deplete one month earlier than usual, likely in January in the highland regions and in March in the lowland regions. After the cereal harvest is concluded, households will run out of their own production for consumption and sales to generate income.

Recommended citation: FEWS NET. Yemen Key Message Update August 2025: Access to food remains constrained despite economic improvement in IRG areas, 2025.

All comparisons are based on weekly monitoring data available as of August 28. It is possible that subsequent comparisons of price changes may change once based on the final monthly average.

This Key Message Update provides a high-level analysis of current acute food insecurity conditions and any changes to FEWS NET's latest projection of acute food insecurity outcomes in the specified geography. Learn more here.