Highlights The market information in January 2015 shows that food was available in all markets except in some conflict affected areas such as Hajja, Al Bayda and Ibb. Wholesale and retail food prices have slightly increased which could have resulted from the current political crisis. However, as a result of stable/improved purchasing power in January, the food security situation is believed to have generally remained stable in January 2015. In November 2014, the general inflation rate of the country was 9.49 percent while the food inflation was 3.60 percent. The general Consumer Price Index (CPI) during the same month was reported at 190.56 while the food CPI was 174.95 and that of cereals stood at 167.08. The average domestic wholesale prices of wheat grain and wheat flour rose by 2.3 percent and 2.9 percent, respectively, in January 2015 compared to the previous month. The average retail prices of wheat rose by 1.4 while the prices of wheat flour remained unchanged between December 2014 and January 2015. The supply of food commodities continued to be normal in most parts of the country, though the flow of commodities was disrupted in some conflict-affected areas such as Hajja, Al Bayda and Ibb. The average Terms of Trade (TOT) between the daily unskilled labour wage rate and wheat flour were 20.86Kg/day in January 2015 which remained unchanged from December, but 7 percent more than in January 2014. The average TOT between a sheep and wheat flour were 279.75Kg/sheep in January 2015 improved by 2 percent from the previous month, and 7 percent higher than in January 2014. The FAO Food Price Index averaged 182.7 points in January 2015, a drop of 1.9 percent from December and 10 percent down from January 2014. The Cereal Price Index averaged 177.4 points in January, down by 3.6 percent from December and lower by 5.8 percent than in January last year. International wheat prices declined by 7 percent between December 2014 and January 2015, and also 9 percent lower than in January last year. A. Inflation and Consumer Price Index (CPI) 1 The latest information published by the Central Statistics Organization (CSO) of Yemen in February 2015 indicates that the general inflation rate rose from 8.49 percent in October 2014 to 9.49 percent in November 2014 based on a 12 month moving average. Similarly, the inflation rate for food rose from 3.52 in October to 3.60 percent in November 2014. The general Consumer Price Index (CPI) increased from 187.47 in October to 190.56 in November 2014. Likewise, the Food CPI rose from 172.86 to 174.95 and that of cereals increased from 164.28 to 167.08 during the same period see Figure 1. The annual inflation rates for the majority of the non-staple food items also rose between October and November 2014. Figure 1: Trends in Consumer Price Index Source: CSO of Yemen. As the information released by CSO lags by two months, the CPI does not reflect the recent food price changes and the relatively stable food security conditions currently prevailing. 1 The CPI is a measure of the average change in the prices of consumer items over time compared with a base year goods and services that people buy for day-to-day living. The CSO of Yemen uses the 2005/06 Household Budget Survey as a base year. Inflation is the percentage change of the CPI over the period of 12 months percentage changes in the CPI during current month compared with the same month last year. For any comments/enquiries please contact: Endalkachew.Alamnew@wfp.org or Ahmed.Ismail@wfp.org Page 1 of 5
B. Wholesale Prices of Wheat and Wheat Flour In January 2015, the average nominal 2 wholesale price of 50Kg wheat grain was 4,450YR while that of wheat flour was 5,325YR which were 2.3 percent and 2.9 percent higher than that reported in December 2014 (see Figures 2 and 3). The increase in the wholesale prices of wheat in January might be due to the ongoing conflict that believed to have affected supply routes from the two port cities of Hodieda and Aden to main markets. Figure 2: National average wholesale wheat prices (YR/50kg) Figure 3: National average wholesale wheat flour prices (YR/50kg) Source: Ministry of Industry and Trade of Yemen During the month of reporting, the wholesale prices of other food and non-food commodities have generally remained stable. However, prices of rice rose by 5.7 percent while prices of sugar fell by 3.1, reflecting the rise in international prices in December 2014. The continuing political instability and conflict may have an effect on markets and consequently the prices of commodities may rise further, particularly in areas like Ibb, Al Bayda and Mareb where tensions are growing since recent weeks. C. Retail Prices of Wheat and Wheat Flour Source: Ministry of Industry and Trade of Yemen During the month of reporting, the average nominal retail prices of wheat and wheat flour were 123YR/Kg and 136YR/Kg, respectively. Retail price of wheat grain rose by 1.4 percent in January 2015 compared to the month before while that of wheat flour remained unchanged during the same period (Figures 4 and 5). The increase in prices of wheat grains could be a reflection of the rise in the wholesale prices. Looking at the pattern of retail prices of wheat and wheat flour across the main markets during the reporting period, the highest price of wheat was 140YR/Kg which was reported from Sa ada while the lowest price was recorded in Amran (100YR/Kg) as a result of improved security situation in the area in the past few weeks. Sa ada market had the highest price for wheat flour (150YR/Kg) while market saw the lowest price (115YR/Kg). Retail prices of other essential commodities have had mixed pattern where prices of tomato and potato declined significantly (24.4 percent and 13.6 percent, respectively) while prices of rice rose markedly by 9.8 percent reflecting the changes in the wholesale prices during the month of reporting (see Table 1 for more details). Figure 4: Trends of wheat retail prices (YR/Kg) Figure 5: Trends of wheat flour retail prices (YR/Kg) Source: WFP sub offices Source: WFP sub offices 2 Nominal prices denote the current monetary value of a good or service i.e. as seen or actually observed by the monitor in the field, in a shop or at a market stall. Real prices are prices adjusted for inflation using a consumer price index of the corresponding year. The process of adjusting for inflation is called deflating by a price index in order to determine the real value of some monetary magnitude in reference to a base period. For any comments/enquiries please contact: Endalkachew.Alamnew@wfp.org or Ahmed.Ismail@wfp.org Page 2 of 5
D. Food Supply to Markets In January 2015, the supply of essential food commodities continued to be normal in most parts of the country. However, the flow of food commodities was disrupted in some areas such as Al Bayda, Hodieda, and Sa ada due to the ongoing conflicts and restricted border market access with Saudi Arabia which affected the movements of traders and the flow/supply of commodities, as well as the normal functioning of markets, which have had a negative impact on local food availability in some areas. Nevertheless, the volume of imported wheat was sufficient to cover the consumption requirement of the country and food supply is expected to remain stable in the coming months of 2015. E. Terms of Trade (TOT) 3 The TOT are proxy indicators of the purchasing power of households which rely on livestock and/or casual labour as their main source of income for the purchase of cereals from the market. TOT are important components of food security analysis. Changes in the TOT between wages/livestock and staple food commodities are indicative of the trends in purchasing power and the impact on the food security situation of households which are dependent on food purchases through income from daily wage labour and/or the sale of livestock. TOT between wage labour and wheat flour In January 2015, the nominal average daily wage rate was 2,833YR which is the same as the rate reported last month. During the month of reporting, the average TOT between the daily unskilled labour wage rate and the retail price of wheat flour stood at 20.86Kg/day, which remained unchanged due to the fact that the wage rate and the price of wheat flour did not change between December 2014 and January 2015. However, the average national TOT between wage labour and wheat flour were 7 percent higher in January 2015 than during same month last year where the average daily wage rate purchased 19.51Kg of wheat flour (Figure 6). The highest TOT was recorded in Sa ada (23.33Kg/day) as a result of higher wage rates and the lowest was reported from Hajja and Hodieda markets (18.52Kg/day). TOT between sheep and wheat flour During the reporting period, the average price of a two-year old male sheep was 38,000YR, which was 2 percent lower than it was in December 2014. The national average TOT between a sheep and wheat flour stood at 279.75Kg/sheep in January 2015 which was improved by 2 percent from December. Moreover, the national average TOT were 7 percent higher in January 2015 than they were during the same month in 2014 where one sheep purchased 262.19Kg of wheat flour (Figure 7). The highest TOT during the month of reporting were recorded in Sa ada (313Kg/Sheep) due much higher sheep prices than in any other markets, while the lowest TOT were in Hodieda market (222Kg/Sheep). Figure 6: TOT between wage rate and wheat flour (Kg/day) Figure 7: TOT between sheep and wheat flour (Kg/sheep) Source: WFP Sub Offices Source: WFP Sub Offices 3 The terms of trade (TOT) is a measure of the relative value of one commodity to another (or the inverse of their relative prices) and thus a measure of the exchange value of the good or service to be traded. Wage to cereal terms of trade is a standard indicator for purchasing power. The livestock to cereal ratio gives an indication of the purchasing power of households selling livestock and purchasing staple foods. Purchasing power is a measurement of the relative value of money in terms of the quality and quantity of goods and services it can buy. It represents the ability of a household to acquire goods and services based on its access to money or other forms of wealth. For any comments/enquiries please contact: Endalkachew.Alamnew@wfp.org or Ahmed.Ismail@wfp.org Page 3 of 5
F. Global Food Prices The FAO Food Price Index averaged 182.7 points in January 2015, down by 1.9 percent from its value in December 2014 and 10 percent from January last Figure 8: Trends of food and cereals price indices year (Figure 8). While prices of sugar and dairy products stayed virtually unchanged, those of the other commodities included in the Index fell in January, with cereals and oils registering the strongest declines. The FAO Cereal Price Index averaged 177.4 points in January 2015, declined by 3.6 percent from December and 5.8 percent lower than January 2014 (Figure 8). This marked decline was mostly driven by remarkable reduction in international Data Source: http://www.fao.org/worldfoodsituation/wfs-home/foodpricesindex/en/ wheat prices, as coarse grains and rice subsided by only 1 percent or less. At its current value, the FAO Cereal Price Index has fallen to its lowest since July 2010. International wheat prices declined by 7 percent between December 2014 and January 2015, and were 9 percent lower than the prices recorded Figure 9: Trend in global wheat prices (USD/MT) during December last year (Figure 9). Although local market dynamics are more influenced by the monopolistic nature of markets in Yemen than global price changes, the current fall in the international wheat prices may lead to some reduction of prices in domestic markets in the coming months. Historically, the rate of transmission of international prices to the domestic markets in the country is only 20 percent 4. The overall market monitoring information in January 2015 shows that food has been available in all markets except in some areas where the current ongoing conflicts have been intensified. Wholesale and retail food prices have slightly increased during the month of reporting which could have resulted from the current political crisis. However, as a result of stable/improved purchasing power in January, the food security of poor households who depend on purchases is believed to have remained unchanged since December, though the impact of the continuing instability and localized conflicts may lead to deterioration of the precarious food insecurity in Yemen. Data Source: http://www.indexmundi.com/commodities/?commodity=wheat 4 Source: WFP Yemen Market Study conducted in 2010 and could be accessed at the link: http://www.wfp.org/content/yemen-market-study-december-2010. For any comments/enquiries please contact: Endalkachew.Alamnew@wfp.org or Ahmed.Ismail@wfp.org Page 4 of 5
Important Remark: The market price data contained in the report should be interpreted with caution as they do not capture the impacts of long term trends in food prices. This approach does not measure or indicate the severity of the likely impact that changes may have on different households due to different income and food basket variations by wealth, by livelihood groups and households capacities to cope with changes. For any comments/enquiries please contact: Endalkachew.Alamnew@wfp.org or Ahmed.Ismail@wfp.org Page 5 of 5