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Sudan inflation rate continues to decline, food insecurity to increase

December 27 - 2021 KHARTOUM
File photo
File photo

The annual inflation rate in Sudan continued to decline in October. The staple food prices were 60-120 percent higher than last year. According to the Famine Early Warning Systems Network (FEWS NET), the food situation in the country remains ‘stressed’ and may become worse in the coming months.

Earlier this month, the Central Bureau of Statistics in Sudan reported a slowdown in the annual inflation growth in October, for the third month in a row, recording 350.84 percent, against 365.82 per cent in September.

According to the report, the inflation recorded in October was mainly driven by the 208.55 per cent rise of the prices of the Food and Beverages group, that affected the already dire purchase power of the avarage Sudanese even more.

“These days, we are only thinking about food, how to get our daily meal, and where to find the cheapest offers,” a housewife complained to Radio Dabanga from Rabak in White Nile state.

She said that many people wonder why the government does not intervene in the local markets and set fixed prices for basic consumer goods. “In this way, traders would not be able anymore to speculate at the food markets by holding back goods until they have become sparce, and then selling them for high prices.”

Food insecurity to worsen

FEWS NET said in its November update on Sudan that humanitarian assistance needs remained high that month, driven by political instability, above-average food prices, and reduced household purchasing power, along with the impact of increased conflict, tribal clashes, and protracted displacement and increasing numbers of refugees in particular in eastern Sudan.

In November, petrol and diesel prices increased by SDG42 to SDG362 per litre and 347 SDG per litre, respectively. “The price of locally produced and imported items rose by a similar rate between October and November,” the network stated. “The poor macroeconomic situation is likely to persist through early 2022 as political instability continues and the economic support by the international community remains on hold.”

FEWS NET expects the high transportation costs to be passed onto the consumer, “reducing household purchasing power and household food access than is typical during the harvest period [October and November]”.

According to the network, the food insecurity in the peripheries of the country will increase in February. “Although the harvest will likely result in seasonal price declines, staple food prices will likely remain 200-350 percent above the five-year average through the beginning of the next lean season in April/May 2022,” the report reads.

Expected food insecurity in Sudan between November 2021 and May 2022 (FEWS NET)

 

Reform programme

For 2021, the Sudanese government set up a economic reform programme, which targeted an annual inflation rate of 95 per cent. The unification of the various national currency rates and the lifting of subsidies on basic consumer commodities were the two basic requirements of the International Monetary Fund (IMF) for support to the economic reform programme of Sudan's new transitional government.

In February, the government began implementing the reforms, and devaluated the Sudanese Pound in an effort to bridge the gap with the forex prices at the parallel market. This led to a significant increase in the currency rates. The US Dollar rate for instance rose from SDG55 to more than SDG375.

A month later, the Dollar customs price (the rate used by the Central Bank of Sudan for import companies) was increased from SDG15 to SDG28, a move that sparked a new wave of inflation. In June, the government removed fuel subsidies, which again led to the increase of consumer prices. Yet, 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, on the condition that the political and security situation would remain stable. The decrease in inflation rates and the trade balance deficit, as well as the stability of the forex rates are indications of an improved economic situation. “We can consider these developments an indication that the reform policy adopted by the government has begun to bear fruit,” he said.  

The reform policy however was suspended following the coup d’état of October 25, under the leadership of army chief and chairman of the Sovereignty Council, Abdelfattah El Burhan and commander of the paramilitary Rapid Support Forces, and of the Sovereignty Council vice-chair Mohamed ‘Hemeti’ Dagalo.

In response to the coup, the World Bank announced the suspension of all aid to Sudan, and halted decisions on any new operations in the country. The USA paused “assistance from the $700 million in emergency assistance appropriations of Economic Support Funds for Sudan”.

The political situation in the country after the October 25 military coup as well led to the delay of the inflation report over October.


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