Sudan Inflation rate continues to decline, food insecurity increases
Khartoum / – The annual inflation rate in Sudan continued to decline in October. The prices of staple foods were 60 to 120 percent higher than last year. According to the Famine Early Warning Systems Network (FEWS NET), the food situation in the country remains “stressed” and could worsen in the coming months.
Earlier this month, Sudan’s Central Bureau of Statistics reported a slowdown in the annual growth of inflation in October, for the third month in a row, recording 350.84%, from 365.82% in September.
According to the report, the inflation recorded in October was mainly due to the 208.55% rise in prices of the Food and Beverages group, which further affected the already dire purchasing power of average Sudanese.
âThese days all we think about is food, how to get our daily meal and where to find the cheapest deals,â a housewife complained to Radio Dabanga in Rabak, White Nile state. .
She said many people wonder why the government does not intervene in local markets and establish fixed prices for basic consumer goods. âThis way traders would no longer be able to speculate in food markets by withholding goods until they become scarce and then reselling them at high prices.
Food insecurity worsens
FEWS NET said in its November update on Sudan that humanitarian assistance needs remained high that month, due to political instability, above-average food prices and shrinking power. household purchases, as well as the impact of increasing conflicts, tribal clashes and protracted displacement and growing numbers of refugees, particularly in eastern Sudan.
In November, gasoline and diesel prices increased from SDG 42 to SDG 362 per liter and SDG 347 per liter, respectively. âThe price of locally produced and imported items increased at a similar rate between October and November,â the network said. “The poor macroeconomic situation is expected to persist until early 2022 as political instability continues and economic support from the international community remains on hold.”
FEWS NET expects the high transport costs to be passed on to the consumer, “reducing household purchasing power and household access to food compared to what is typical during the harvest period. [October and November]”.
According to the network, food insecurity in the outskirts of the country will increase in February. “While the harvest is likely to lead to seasonal price declines, staple food prices are likely to remain 200-350% above the five-year average until the start of the next lean season in April / May 2022,” the report said. report.
Food insecurity expected in Sudan between November 2021 and May 2022 (FEWS NET)
For 2021, the Sudanese government has put in place an economic reform program, which targeted an annual inflation rate of 95%. The unification of the different rates of the national currency and the removal of subsidies on basic consumer products were the two fundamental requirements of the International Monetary Fund (IMF) to support the economic reform program of the new transitional government of Sudan.
In February, the government began implementing reforms and devalued the Sudanese pound in an attempt to close the gap with forex prices on the parallel market. This has led to a significant increase in exchange rates. The US dollar rate, for example, has gone from SDG55 to over SDG375.
A month later, the customs price of the dollar (the rate used by the Central Bank of Sudan for import companies) rose from SDG15 to SDG28, triggering a new wave of inflation. In June, the government removed fuel subsidies, which again pushed consumer prices up. However, the annual inflation rate in August showed a slight decline.
Dr Hasan Bashir, professor of economics at El Nilein University in Khartoum, told Radio Dabanga in September that he expected the economy to improve in 2022, provided the political and security situation remained. stable. The decline in inflation rates and the trade balance deficit, as well as the stability of exchange rates, are signs of an improvement in the economic situation. “We can take these developments as an indication that the reform policy adopted by the government has started to bear fruit,” he said.
The reform policy was, however, put on hold following the October 25 coup, under the leadership of the army chief and president of the Sovereignty Council, Abdelfattah El Burhan and commander of the Paramilitary Rapid Support Forces, and the vice-president of the Sovereignty Council Mohamed ‘Hemeti’ Dagalo.
In response to the coup, the World Bank announced the suspension of all aid to Sudan and suspended decisions on any new operations in the country. The United States has suspended “aid from the $ 700 million in emergency aid funds from the Economic Support Fund for Sudan.”
The political situation in the country after the October 25 military coup also prompted the postponement of the inflation report to October.