Researchers: Uncontrollable inflation, why? [Archives:2007/1055/Business & Economy]
A seminar organized by the Yemeni Center for Strategic Studies discussed the continuous price hikes and the uncontrollable inflation levels being witnessed in the Yemeni markets, several researchers participated in the seminar as well as government officials, businessmen, and representatives of civil society including the consumer protection society, which continues to criticize the continuous unannounced price hikes especially in foodstuff such as wheat, sugar, milk, cooking oil and also other consumer goods which affected mostly the most deprived segments of the society with very limited income.
During the seminar, Minister of Trade and Industry Dr. Yahya Al-Mutwakel has admitted that the prices of foodstuff and other consumer goods have increased, however, he stated that such increases are normal and correlate with the increases in global prices of these items, as Yemen continues to depend on the international market to buy its food. He also added that the public financial reforms have played a role in increasing the inflation which made the Yemeni Riyal weaker in the global market and hence it costs more Riyals to buy the same amount of foodstuff from other countries.
However, the Minister has stated that the government is executing a long-term strategy that would eventually stabilize the prices and keep inflation at acceptable levels, adding that the Yemeni market is still volatile and fragile and such policies would help strengthen the underlying market fundamentals with the view of creating an open and competitive market.
On his part Dr. Moahmmed Al-Maitami, Secretary-General of the Union of Yemeni Chambers of Commerce, has called on the government as well as the privet sector to responsibly and jointly solve this problem, as well formulate a workable plan in order to solve the problem of increasing prices, adding that the government should do its role and monitor the retail prices of all products on periodical bases, and take correctional measures against any increases in the prices.
Being an economist, Dr. Al-Maitami described the Yemeni consumer as highly price-sensitive, and that the on-going trend of augmenting the prices of foodstuff isn't justifiable and points to a serious problem that should be dealt with rationally and promptly.
Dr. Mohammed Al-Afandi, director of the Yemeni Center for Strategic Studies and the host of the conference, has stated that blaming international markets and global trade economics isn't rational, he said that although global trade has something to do with the increases in prices, there are many other factors which played a role in prices hiking and those factors are internal, constant, and do not correlate with the changes in market powers or consumer demand, he also coined the phrase “Price Lunacy” in describing the trends of prices in Yemen.
Dr. Al-Afandi also said that the remedy for this price lunacy lies in revising the on-going macroeconomic policies which are “wrong” and also reforming government economic interference mechanisms which have become a liability, he specifically stated that the economic misery being survived by Yemeni consumers are a direct outcome of the government's economic mismanagement and the failure of the regime in creating sustainable economic growth that might help stabilize the domestic economy.
Inline with that, Opposition leader Mr. Yehya Al-Shami has agreed with the notion of government economic mismanagement and added: “the objective of this regime is not to create a future for the country, but to continue extorting the people for more money to keep up the lavish lifestyle of top officials and corrupt employees in government circles” he also called on the government to adopt a productive and value-addition economic policy to boost national output and efficiency in order to create any sort of development.
However, the privet sector got a significant share of the blame, as it takes advantage of the economic mismanagement, non-existence of efficient government monitoring mechanism, and the dire need of the people to purchase food at any cost “the privet sector has absolutely no corporate social responsibility” said Professor Taha Al-Fusail, professor of economics at Sana'a University, he also indicated that the on-going economic scenario in Yemen is that of a controlling oligopoly where a number of businessmen control almost all the trading in foodstuff especially wheat, and that these businessmen set the prices with higher-than-ethical profit margins knowing that the consumer is forced to purchase it or starve.
In essence, the seminar concluded that the main cause of increasing prices is the government's ineffective economic policies, as the government should be playing the role of the watchdog to protect the basic human rights of its citizens, including the right to food, however, the government is unable to spur economic activity or development in spite of the funds it collects in terms of taxes or other sources of revenue, and eventually the most deprived segments of the society have to suffer.