With the continued deterioration of the riyal, Yemen tops the list of Arab countries in high prices and low purchasing power

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Yemen topped the list of Arab countries in terms of inflation (rising consumer prices and declining purchasing power) at a rate of 10% in September 2021, with expectations of a rise to 40% during this year, with the continued deterioration of the local currency, according to data from the Central Bank of Yemen in Aden.

This comes as the World Bank explained that the depreciation of the currency in the areas controlled by the recognized government is linked to financing the deficit by increasing the money supply by the Central Bank of Yemen in Aden.

Funding the deficit with cash coincided with the rise in inflation in the areas under the recognized government from the end of 2019 to the beginning of 2020, and the accompanying devaluation of the currency.

The central bank resorted to fully financing the monetary deficit by increasing the money supply in 2020, at 6.9% of GDP; That is, one billion and 900 thousand dollars, which led to an acceleration of the depreciation of the exchange rate and inflation.

The combination of higher food prices and lower incomes has led to a significant decrease in the real income of the entire population, including families in difficult situations who are hardly able to cope with any further decline in purchasing power.

The World Bank predicted in the report “The Food Security Crisis in Yemen” that families will be forced to choose between urgent needs that must be satisfied more than at any time during the conflict.

“Families may have to give up a minimum adequate diet, necessary medical care, education for children, adequate housing, and a number of other urgent needs,” he added.



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