DUBAI: Yemen’s annual inflation climbed to a 15-month high of 14.2 percent in May, mainly due to increases in food, tobacco and qat prices, while June foreign currency reserves fell to their lowest level since August 2012.
Inflation had retreated from a peak of 25 percent in October 2011 to as low as 5.5 percent last November as the economy started picking up after two years of political unrest. But price growth rebounded again to hit 14 percent in April.
On a monthly basis, prices grew 0.3 percent in May, down from a 0.6 percent rise in April, central bank data showed yesterday.
Food inflation in the poor Arabian Peninsula state edged up to 16.6 percent year-on-year, its highest level since January 2012, from 16.3 percent in April.
Annual price growth of tobacco, cigarettes and qat, a mild stimulant leaf that many of Yemen’s 25 million people chew daily, accelerated to a 15-month high of 27.1 percent in May from 26.6 percent in the previous month.
Excluding food and qat, annual consumer price inflation was 6.3 percent in May, unchanged for the third consecutive month.
Interest rates
The central bank cut interest rates by 5 percentage points between last October and February to support an economic recovery. Its head said in April that he was comfortable with the current level of rates — a three-year low of 15 percent.
The International Monetary Fund forecast in April that Yemen’s inflation would average 7.5 percent in 2013, down from 10.2 percent in 2012. The central bank’s gross foreign assets fell to a 10-month low of $5.7bn in June, or 6.1 months of imports, from $5.8bn, or 6.2 months of imports, at the end of the previous month, the data also showed.
Yemen depends on crude oil exports to replenish its foreign currency reserves and cover up to 70 percent of the government budget. The country’s oil exports rose 2.8 percent month-on-month to $212m in June, however, they plunged nearly 45 percent when compared with a year ago, the data showed.
Reuters
