The cost of living crisis, Yemen style

Summary: the truce has stopped the fighting but the situation for the vast majority of Yemenis after more than seven years of war continues to worsen.

We thank Helen Lackner for today’s article. She has worked in Yemen since the 1970s and lived there for nearly 15 years, and writes about the country’s political, social and economic issues. Helen works as a freelance rural development consultant and is a visiting fellow at the European Council for Foreign Relations. She is the author of Yemen in Crisis, the Road to War published by Verso, a seminal study of the current war and what lies behind it; a revised edition with additional material is coming out shortly. On 15 July Routledge published her new study Yemen: Poverty and Conflict. Here’s how to purchase the book and secure a 20% publisher discount. Helen’s most recent Arab Digest podcast ‘Yemen, a ceasefire and reason to hope’ is available here.

Yemenis have just celebrated their first Eid al Adha without major fighting since 2015. This has certainly made it a more pleasant and relaxed event than in recent years thanks to the truce due to expire on 2 August. Throughout these years, their living conditions have severely deteriorated from an already low base: 49% of Yemenis lived below the poverty line in 2014, rising to well over 80% by 2020.  Since then, other than the positive development of the truce, the news is bad. Yemenis have suffered a largely uncontrolled Covid epidemic, with the lowest vaccinations rate in the world (2%), floods and droughts emphasising the disastrous impact of climate change on poor countries, further collapse of the economy and a divided financial system. To cap it all, in recent months the Ukraine-Russia crisis has both vastly increased fuel prices and threatens shortages of the main staple, wheat: the country depends on imports for 90% of its wheat supplies and 45% of this comes from Russia and Ukraine. So what does the ’cost of living’ crisis mean for Yemenis?

First it is important to realise that, in Yemen as elsewhere, the situation differs depending on who and where you are. For the small minority of war profiteers and the few well-paid staff of international and some national agencies, the impact is low; they can afford the rising prices and hire others to queue on their behalf at fuel stations or for gas canisters. For the majority, the situation is dire, but also varies in different parts of the country, mostly but not exclusively according to who controls the area.

For the first time in years, people don’t have to worry about airstrikes or fighting along the major fronts; some roads which were impassable for military reasons have now re-opened. But the multiplicity of check-points make travel both expensive and problematic particularly for ‘northerners’ travelling to Aden and other southern governorates, something which remains essential for most international travel and other activities despite the few civilian flights now leaving from Sana’a.

While the irregularly received monthly income of a teacher or medical staff is about YR 50,000, the per capita minimum food basked cost YR 9000 in Houthi controlled areas and YR 15,000 elsewhere. Given that the average household includes about 7 people, normal people’s incomes, everywhere in Yemen, are significantly below what is needed for basic survival. A sheep suitable for slaughtering for Eid this year cost upwards of YR 120,000.

Overall, prices in IRG controlled areas are double those in Houthi areas because of the IRG’s transfer of the Central Bank of Yemen (CBY) to Aden in September 2016, worsening the financial crisis. While exchange rates are important everywhere, in a country which imports about 80% of its basic necessities their importance is overwhelming. The Houthis forbid use of new notes printed for the IRG in their part of the country, so the US dollar is worth about YR 600 there by contrast with YR 1700 per US dollar in January 2022 in IRG areas. The Saudi-Emirati promise in April of a contribution of US$ 2 billion to the Aden-based CBY led to a temporary improvement, but this is waning as the prospects of these funds arriving becomes increasingly remote; in mid-July the rate was YR 1200 to the dollar.

Aden protests
Hundreds of people in Yemen’s interim capital of Aden blocked roads to protest against the deterioration of public services, widespread power cuts and soaring fuel prices, 19 June 2022 [photo credit: @Alsakaniali]
The following examples give an indication of the volatility of prices and in particular of the differences experienced by people according to who controls the area. Most people in urban areas now depend on trucking for their domestic water supplies: between December 2020 and June 2022, the cost of one cubic metre of trucked water in Houthi areas dropped from YR 3300 to YR 2600 while in IRG areas it rose from YR 2800 to YR 6100. Cooking gas rose from YR 7000 to YR 7900 in Houthi areas and from YR 4500 to YR 12,000 in IRG areas. In the same period, petrol rose of YR 390 to YR 640 per litre and diesel from YR 410 to YR 706 under the Houthis, while it rose from YR370 to YR 1100 and diesel from YR 420 to YR 1300 in the IRG area. In addition to private domestic solar electricity supply, local private networks charge about  YR 450/kwh. Given the importance of fuel to operate generators, transport food, extract water from wells and provide power, these give an indication of the severity of the cost of living crisis.

Coming to wheat, following the Russia-Ukraine crisis, existing stocks are expected to run out in coming weeks. The government and private sector are jointly actively trying to persuade India, among others, to sell wheat, but the retail situation has already deteriorated severely since end 2020:  then 1kg of flour cost YR 300 in Houthi areas, rising to YR 420 in June 2022 while in the IRG area it rose from YR 400 to YR 900!

This brief summary of inflation for basic necessities clearly demonstrates that Yemenis are in dire straits, particularly as there are few opportunities for increasing income to compensate for this crisis. With 17 million people described as severely food insecure and needing humanitarian food assistance, the main provider, the World Food Programme has not only reduced the number of people it supports from its target of 13 million to 7 million in May but moreover about half of them now receive half of the planned quantities, which are certainly by no means generous.  No wonder the Assistant Secretary General for Humanitarian Affairs told the UNSC on 11 July that ‘Yemen’s humanitarian catastrophe is about to get much worse.’ To cap it all, funding for humanitarian support had only reached 27% of requirement in early July, i.e. less than half what was needed by that time, and the WFP in particular had a shortfall of US$ 1.5 bn for the year, having received only US$ 4.6 million.

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