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High maize meal prices likely impact household purchasing power

  • Key Message Update
  • Lesotho
  • July 2023
High maize meal prices likely impact household purchasing power

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  • Key Messages
  • Key Messages
    • In July, elevated wheat and cooking oil prices are likely negatively impacting poor household purchasing power in Lesotho, but area-level Minimal (IPC Phase 1) outcomes remain the most likely as most poor households continue to meet their food and non-food needs following the 2023 main harvest. The near-average maize harvest is expected to be supporting household access to food. From around mid-July to early August, the government, through the Food Management Unit (FMU), plans to purchase 1.2 million kilograms of maize and 240,000 kilograms of beans from local farmers. However, early reports indicate that FMU has purchased very low volumes due to poor response from farmers with surplus crops. Targeted beneficiaries are expected to engage in community projects to receive food. 

    • In June, staple food prices in Maseru increased atypically, with 2.5 kg of local maize meal retailing for 29 LSL (~1.62 USD), around 13 percent higher than in May and 32 percent higher than last year's prices. Similarly, mixed beans and split pea prices increased by 11 and 9 percent from May to June, respectively, and were 11 and 19 percent above prices last year. The rise in prices is likely driven by increases in transportation costs and currency depreciation. The decline in food prices in South Africa and the ongoing harvest in Lesotho are expected to drive the decline in food prices and support household purchasing power.

    • The economic slowdown in South Africa is likely contributing to a widening of Lesotho's current account deficit, undermining the recovery of Lesotho's textile and mining sectors, and negatively affecting economic growth. This economic slowdown is likely impacting the availability of jobs for Basotho in South Africa and remittance incomes. In 2022, the World Bank estimated that personal remittances accounted for around 22.5 percent of Lesotho's GDP. Although the World Bank projects that Lesotho's economy will modestly recover in 2023, rural household access to income from remittances will likely remain constrained. However, in the near term, the near-average 2023 cereal harvest is expected to provide rural households with an important source of food and income.

    • In June, annual headline inflation declined to 5.6 percent, the lowest rate since late 2021, driven by declines in the cost of transportation, communication, restaurants, and hotel sub-indices. Relatedly, the annual inflation rate for the food and non-alcoholic beverages subindex decelerated from 9.6 percent in May to 8.3 percent in June, driven by the disinflation of meat and edible oil by -2.5 and -1.9 percent, respectively. However, vegetable, bread, and cereal prices remain 15 to 20 percent higher than last year, likely impacting household purchasing power, particularly for market dependent households.

    Recommended citation: FEWS NET. Lesotho Key Messages July 2023: High maize meal prices likely impact household purchasing power, 2023.

    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.

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