External factors behind price hike? [Archives:2004/704/Front Page]

January 19 2004

Mohammed bin Sallam
The Yemeni cabinet has last Tuesday familiarized itself with a special report on the price changes in wheat and flour and some other commodities, which according to the council of ministers, are ascribed to outside factors. The cabinet says the increase in prices are caused by the rise of those commodities prices at the world level, added to that the increase in transportation costs. The council of ministers has also affirmed that the current hikes in prices could be considered as emergency and extraordinary state and that it has entrusted the minister of Industry and Trade to implement the part related to the foodstuffs included in the cabinet resolution No. 69 for the year 2003 for another six months.
The request also included carrying out an inspection campaign to warehouses and preventing any manipulation of monopoly of foodstuffs, especially the commodities of wheat and flour. The council of ministers has given its directives to give priority in the unloading operation at Yemeni ports to basic foodstuffs and also to study reflections of price increase on local commodities.

Role of grain silos in price hike
Moreover the ministry of communications has been asked to present a comprehensive report on conditions of the sea ports quays and storing capacity of companies working in grains silos, along with emphasizing on opening the way for investment in this field at al-Mukalla port and to expand this area more and more before investors with the aim of creating competition in the trade of foodstuffs and preventing monopoly operations.
The council of ministers also stressed on the operation of collecting duties pertaining to dual transportation of food commodities by all sides as well as respecting regulations and laws related to this matter provided that those violating those rules should be subject to accountability immediately.

Public surprised
Various society segments interviewed by Yemen Times have expressed their surprise and shock to the government's statements on the price rise and their attribution to external factors, reminding the government that vegetables and fruits could not be affected by such foreign factors. Other commodities have also had their prices rise at rates ranging between 50 to 70% including eggs, whose prices jumped to 200% its original price.
By excluding wheat, flour, rice, sugar, milk and other food commodities, observers say that the situation in its present state calls for resentment and worry especially on part of civil and military employees, workers and those of limited incomes whose incomes have not witnessed any improvement.

Fear about possible rise in fuel prices
On he other hand a reliable economic source mentioned that the government is intended to raise prices of oil products in the coming few days in response to demand by the World Bank in a bid to tackle dangerous economic congestion. The source also told the media that the rate of price rise would exceed 100% for the diesel, to be 40 rials per liter and the refined benzene price would be 50 rials per liter. The source quoted the World Bank as mentioning that realization of a rapid and sustainable economic growth is a necessary question for alleviation of poverty but would be a great challenge requiring effecting of courageous changes in the general environment of businesses activity , structure of good rule and elimination of growth hindrances.
Yemeni economists have warned that an increase in diesel and other oil products prices the government intends to introduce the beginning of the second half of this year, would create a real disaster in Yemen. Once more, rise in prices would make the citizen unable to bear new expenses and would result in doubling the percentage of the poor and needy in Yemen.
Observers believe that this state would also increase the volume of unemployment and may lead to a declared resentment among the society's segments and may even have serious consequences on the social, economic and political stability in the country.